USD/CAD halts its winning streak on improved oil prices, trades near 1.3340

• USD/CAD receives downward pressure as Crude oil prices improve.
• WTI price gains ground on the heightened situation in the Red Sea.
• US Dollar might have cheered up the improved ISM Manufacturing data.

USD/CAD snaps its five-day winning streak, trading lower near 1.3340 during the Asian session on Thursday. The Canadian Dollar (CAD) receives upward support on improved Crude oil prices.

West Texas Intermediate (WTI) price trades higher near $73.10 per barrel. Crude oil prices are on the rise, fueled by heightened tensions in the Israel-Gaza conflict. In addition to geopolitical concerns, disruptions at a key oilfield in Libya are playing a role in boosting Crude oil prices. The Iran-backed Houthis targeted a container ship in the southern Red Sea en route to Israel. This incident has escalated fear about maritime security in the Red Sea region.

Canada will see labor market data for December on Friday including Unemployment Rate and Net Change in Employment. On the United States (US) docket, labor market data releases including ADP Employment Change and Initial Jobless Claims will be eyed on Thursday.

The US Dollar Index (DXY) strengthened on risk-off mood, coupled with improved United States (US) Treasury yields. The positive momentum might have found support from the improved ISM Manufacturing PMI report, which showed an increase to 47.4 in December from the previous reading of 46.7, exceeding the market consensus of 47.1. However, JOLTS Job Openings reduced to 8.79M, falling short of the expected figure of 8.85M in November.

The December minutes of the Federal Open Market Committee (FOMC) indicate that participants believe the policy rate has either peaked or is near its highest point in the current tightening cycle. Despite this observation, they highlight that the exact path of the policy will depend on how the economic conditions evolve.