2023.10.1811:26:00UTC+00Canadian Dollar Climbs As Middle East Tensions Mount

The Canadian dollar moved up against its major counterparts in the European session on Wednesday, as oil prices jumped over 3 percent after a huge explosion at a Gaza hospital derailed the diplomatic efforts led by the U.S. to mobilize support for "Israel's right to defend itself".

While the attack drew condemnation from Arab governments, Israel blamed a failed missile from militant group Palestinian Islamic Jihad for the blast, which killed about 500 people.

The escalation of violence along Israel's border with Lebanon has also raised concerns of a wider regional conflict that diplomats are trying to prevent.

Oil prices were also buoyed by improved economic readings from China and industry data showing across the board draws in crude and product inventories.

Official data showed China's GDP grew at a 4.9 percent annual pace in July-September, down from 6.3 percent in the previous quarter but above forecasts for a 4.4 percent increase.

Retail sales and industrial output figures for September also surprised on the upside, suggesting that Beijing's stimulus measures to prop up banking and property sectors are gaining traction.

Meanwhile, the American Petroleum Institute reported that U.S. crude stocks fell by about 4.4 million barrels in the week ended Oct. 13, in another sign of tight supplies.

Gasoline inventories dropped by 1.6 million barrels, while distillate inventories fell by about 610,000 barrels.

The loonie rose to 1.4394 against the euro and 1.3617 against the greenback, off its early lows of 1.4438 and 1.3658, respectively. The currency is seen facing resistance around 1.42 against the euro and 1.32 against the greenback.

The loonie touched 109.95 against the yen, setting a 2-day high. Next key resistance for the currency may be located around the 113.00 level.

The loonie recovered to 0.8680 against the aussie, from an early 6-day low of 0.8711. If it rises further, it may find resistance around the 0.85 area.

At 8:15 am ET, Canada housing starts for September are scheduled for release.

U.S. building permits and housing starts for September as well as the Fed Beige book report will be released in the New York session.