The USD/CAD pair declines to approximately 1.3890 during the Asian trading session on Friday. The Canadian Dollar appreciates against the Greenback as crude oil prices experience a rebound. Market participants will closely monitor the US December Industrial Production report and the subsequent comments from Federal Reserve officials later on Friday. The USD/CAD pair is currently trading lower, hovering around 1.3890 during the early Asian session on Friday. Elevated crude oil prices bolster the commodity-linked Canadian Dollar. The positive US economic data enhances expectations for the Fed to maintain its current rate.
Ukraine has intensified its offensive against Russian tankers, with a minimum of six vessels being struck by drones and missiles in the Baltic Sea. Increasing geopolitical risks elevate crude oil prices and offer a degree of support to the commodity-linked Loonie. Canada stands out as a significant player in the oil export market, and typically, elevated crude oil prices tend to bolster the CAD.
Conversely, indications of progress in the US labor market, coupled with the strong Retail Sales data published earlier this week, bolster the argument that the US Federal Reserve will maintain rates at their current levels for the upcoming months. This, in turn, may support the Greenback in the near term. Morgan Stanley analysts have revised their projections for rate cuts to June and September, shifting from the previously anticipated January and April, following the release of the US December jobs data.
Chicago Fed President Austan Goolsbee stated on Thursday that, given the substantial evidence of stability in the job market, the central bank’s priority should be to reduce inflation. Meanwhile, San Francisco Federal Reserve President Mary Daly indicated that monetary policy is “in a good place” to respond to economic shifts.