The USD/CAD pair is currently witnessing modest declines, trading near 1.3685 during the early European session on Friday. The US Dollar experiences a decline relative to the Canadian Dollar, influenced by disappointing US economic indicators and an uptick in crude oil prices. The preliminary evaluation of the Michigan Consumer Sentiment Index for February is poised to garner interest later on Friday.
Data released on Thursday indicated that the number of Americans submitting new applications for unemployment benefits rose more than expected last week. USD/CAD experiences slight declines, trading near 1.3685 during the early European session on Friday. The increase in US weekly jobless claims exceeded expectations last week, while JOLTS job openings experienced a significant decline in December. Elevated crude oil prices may support the commodity-linked Loonie.
In December, job openings in the US saw an unforeseen drop, hitting the lowest point since 2020, accompanied by a rise in layoffs. In January, firms disclosed the most significant number of job cuts since the Great Recession of 2009. Signs of a weakening labor market in the United States could apply downward pressure on the Greenback in comparison to the CAD. In the prevailing environment, ongoing geopolitical risks could drive up crude oil prices, consequently providing a measure of support to the commodity-linked Loonie. Canada is a notable participant in the oil export market, and higher crude oil prices generally have a positive impact on the CAD.
Nonetheless, the potential downside for the pair may be limited given the hawkish shifts in expectations surrounding Federal Reserve leadership. Last week, US President Donald Trump nominated former Fed governor Kevin Warsh for the position of Fed chair. Market participants anticipate a more measured strategy regarding interest rate reductions throughout his administration, coupled with a focus on decreasing the Federal Reserve’s balance sheet.