USD/CAD was down 0.08% at 1.0491 by mid-afternoon in New York, after earlier hitting as high as 1.0541. The prospect of US military action against Syria, in retaliation to what is claimed were chemical attacks on civilians by the Syrian regime, initially prompted a flight to the safety of the US dollar, pushing the Loonie close to a seven-week low against its US counterpart.
The US dollar gained against most major currencies today, a day after Secretary of State John Kerry claimed there is undeniable evidence that chemical weapons were used in an attack on civilians in Damascus last week.
There are also concerns, though, that any military conflict in the region could disrupt Middle-Eastern oil production, which has propelled crude oil futures 3% higher to $109 a barrel, its highest price since early July.
Crude oil is Canada’s biggest export, of course, and there is often a correlation between higher oil prices and a stronger Canadian dollar. As a consequence, today’s higher oil price helped the Loonie to recover its earlier losses and eventually strengthen against the US dollar.