Canadian Dollar Higher As Oil Prices Rally

The Canadian dollar rose against its major counterparts in the New York session on Monday amid higher oil prices, as traders braced for escalating conflict in the Middle East following an Israeli strike on Hezbollah targets in southern Lebanon.

Investors fretted about a regional war after a round of high-level talks in Cairo meant to bring about a ceasefire and hostage deal to temporarily end the 10-month Israel-Hamas war in Gaza ended on Sunday without a final agreement.

Israeli and Hezbollah forces engaged in extensive exchanges of fire early Sunday morning along the Israel-Lebanon border, marking a significant escalation in their longstanding conflict.

About 100 Israeli warplanes struck and destroyed "thousands" of Hezbollah rockets and missile launcher barrels to be launched at the country, the Israel Defense Forces (IDF) said in a statement on Sunday.

The militant group responded by firing more than 200 projectiles that did limited damage, according to Israeli officials.

The upside in oil prices also reflected optimism about the outlook for U.S. demand after Federal Reserve Chair Jerome Powell signaled the central bank is prepared to begin cutting interest rates.

The loonie advanced to more than a 5-month high of 1.3463 against the greenback and near a 2-week high of 1.5042 against the euro, off its early lows of 1.3515 and 1.5124, respectively. The currency is likely to locate resistance around 1.33 against the greenback and 1.48 against the euro.

The loonie climbed to 0.9128 against the aussie and 107.22 against the yen, from an early low of 0.9181 and a 1-week low of 106.21, respectively. The currency is seen finding resistance around 0.89 against the aussie and 110.00 against the yen.

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