During the early European hours on Friday, the USD/CAD pair is making an attempt to retrace recent losses, trading around 1.3490. The US Dollar (USD) remains on an upward trajectory, bolstered by robust economic data from the United States (US) and higher US Treasury yields.
The US Dollar Index (DXY) is hovering around 103.40, supported by 2-year and 10-year yields on US bond coupons at 4.35% and 4.15%, respectively. Solid economic indicators contribute to the USD’s strength, with December’s US Housing Starts surpassing expectations at 1.46M, while Building Permits (MoM) increased to 1.495M, outpacing the market consensus of 1.48M. Additionally, Initial Jobless Claims for the week ending January 12 showed a decrease to 187K from the previous reading of 203K.
Conversely, the Canadian Dollar (CAD) finds support in elevated Crude oil prices, given Canada’s position as the largest oil exporter to the US. West Texas Intermediate (WTI) is holding around $73.90 per barrel, underpinned by declining Crude Oil stockpiles. The US Energy Information Administration (EIA) reported a noteworthy decrease of 2.492M barrels in US Crude Oil Stocks Change, exceeding expectations and indicating a positive trend.
Looking ahead, economic data scheduled for Friday includes Canada’s Retail Sales for November, providing insights into consumer spending trends. Simultaneously, the United States will release the Michigan Consumer Sentiment Index for January, offering indications of consumer confidence in the economic outlook. In addition to economic indicators, market participants will closely monitor speeches from central bank officials for further context and insights into potential shifts in monetary policies.