Forex News: Canadian Dollar Falls As Middle East War Intensifies

Canadian Dollar Falls As Middle East War Intensifies

(RTTNews) - The Canadian dollar weakened against other major currencies in the European session on Thursday, as investor mood was negatively impacted by the escalation of international trade and the conflicts in the Middle East.

New attacks in the Middle East stalled the signing of a U.S.-Iran peace agreement, delaying the reopening of the Strait of Hormuz, a critical waterway for the global energy market and trade.

Gulf hostilities erupted once more when the U.S. military launched strikes close to the Strait of Hormuz, while Iranian bombings on Kuwait devastated its airport and killed dozens of people. Diplomatic efforts to end the conflict appeared to be making little headway.

U.S. Central Command said U.S. forces defeated multiple Iranian ballistic missiles and drones and conducted "self-defense" strikes on Qeshm Island in response to attempted attacks by Iran.

However, reports suggest that the U.S. and Iranian negotiating teams were inching closer to sign a MoU, with a draft awaiting U.S. President Donald Trump's approval. Trump reportedly wanted a few edits made to the contents of the proposal centering on the Strait of Hormuz and Iran's nuclear programs.

Trump also announced that he had secured a ceasefire between Israel and Lebanon and affirmed that both nations have agreed to halt attacks on each other.

As the gulf war entered day number 97, expectations on a positive signal on a U.S.-Iran agreement diminished after reports of fresh military strikes in the Middle East.

According to S&P Global's Canada services PMI data released on Wednesday, Canada's services economy grew at a modest rate in May as the Middle East crisis increased economic uncertainty and rising gasoline prices led to the fastest increase in operational costs in four years.

In the European trading today, the Canadian dollar fell to a 2-month low of 1.3921 against the U.S. dollar, nearly a 2-week low of 114.85 against the yen and nearly a 2-month low of 1.6155 against the euro, from 1.3987, 115.14 and 1.6128, respectively. If the loonie extends its downtrend, it is likely to find support around 1.40 against the greenback, 113.00 against the yen and 1.63 against the euro.

Against the Australian dollar, the loonie edged down to 0.9930 from an early 3-day low of 0.9899. The loonie may test support around the 0.99 region.

Looking ahead, U.S. weekly jobless claims data is due to be released in the New York session.

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