USD/CAD experiences a slight decline, trading near 1.3695 during the early European session on Friday. The increase in crude oil prices, driven by tensions between the US and Iran, bolsters the commodity-linked Canadian Dollar. Market participants are closely monitoring crucial US inflation metrics to evaluate the trajectory of the Federal Reserve’s monetary policy in the near future. The USD/CAD pair is currently positioned in negative territory, hovering around 1.3695 in the early European session on Friday. The Canadian Dollar strengthens against the Greenback amid higher crude oil prices. Market participants are closely monitoring the upcoming Canadian Retail Sales figures, in addition to the preliminary US Q4 Gross Domestic Product report and the US Personal Consumption Expenditures Price Index data.
Ongoing geopolitical risks are driving up crude oil prices, thereby offering a degree of support to the commodity-linked Loonie. US President Donald Trump stated on Thursday that Iran had a maximum of 10 to 15 days to reach an agreement regarding its nuclear program, according to a source. Trump stated that “really bad things will happen” if no deal is reached with Iran, asserting that the US will secure a deal one way or the other. It is important to recognize that Canada stands as a significant player in the oil export market, and elevated crude oil prices typically exert a favorable influence on the CAD.
Conversely, robust US economic data and a more hawkish stance from the Federal Reserve could provide support for the US Dollar against the CAD. The US Initial Jobless Claims fell to 206,000 for the week ending February 14, as reported by the US Department of Labor on Thursday. This reading fell short of the market consensus of 225,000 and decreased from the prior week’s revised figure of 229,000.
The US Personal Consumption Expenditure data, which serves as the Federal Reserve’s favored measure of inflation, is set to be released later on Friday, providing insights into potential shifts in US monetary policy. The preliminary reading of Gross Domestic Product for the fourth quarter is set to be released. A potential negative outcome from the reports may exert downward pressure on the USD in the short term.