• USD/CAD draws support from a modest downtick in Oil prices and a bullish USD.
• Reduced bets for a 50 bps Fed rate cut next month continue to benefit the buck.
• Middle East tensions act as a tailwind for the Loonie and cap gains for the major.

The USD/CAD pair oscillates in a narrow range, around the 1.3580 region on the first day of a new week and is currently placed just below a two-week high touched on Friday. 

A modest downtick in Crude Oil prices undermines the commodity-linked Loonie amid expectations for a bigger interest rate cut by the Bank of Canada (BoC) later this month. The US Dollar (USD), on the other hand, consolidates last week's strong gains to its highest level since August 16 and remains supported by diminishing odds for a more aggressive policy easing by the Federal Reserve (Fed). This turns out to be a key factors acting as a tailwind for the USD/CAD pair. 

The blowout US monthly jobs data released on Friday pointed to a still resilient labor market and suggested that the economy is in a much better shape. This, in turn, forced investors to further scale back their bets for another oversized interest rate cut by the US central bank in November and keep the yield on the benchmark 10-year US government bond close to the 4.0% threshold. Apart from this, persistent geopolitical risks offer additional support to the safe-haven buck.

Meanwhile, fears that escalating tensions in the Middle East could trigger a broader conflict and disrupt supply from the key oil-producing region help limit the downside for the black liquid. This, in turn, holds back bulls from placing fresh bets around the USD/CAD pair. Even from a technical perspective, a sustained strength beyond the very important 200-day Simple Moving Average (SMA) hurdle, near the 1.3600 mark, is needed to support prospects for further gains.