The US, the UK, and France launched airstrikes against Syria, attempting to destroy chemical weapons that the Assad regime previously used against its citizens. Russian President Putin and Iran have condemned the attack and warned of the consequences. Trump called it a “sustained response” while UK Theresa May said it was limited.

Tensions around Syria pushed oil prices higher, helping the Canadian dollar, but a deterioration of the situation may sour the market mood and weigh on the risk-on C$. This is a double-edged sword for the Canadian dollar.

Oil prices have other good fundamentals to rise on: inventories of crude oil are falling and OPEC and non-OPEC members want to continue the production cuts for a long time. Yet the most recent spike above $67 on WTI Crude Oil came from the tensions around Syria. The highest levels that the black gold traded in since 2014 were not sustained but ongoing Mid-East tensions could keep them afloat.

However, the C$ rises and falls with the global mood. If share prices tumble on growing worries about a clash involving Iran, Israel, and perhaps also the US and Russia, the Canadian Dollar would not benefit. The safe-haven yen and then the US dollar would have more to gain, while the loonie would join other commodity currency peers in sliding.