During the Asian session on Friday, the USD/CAD pair continues its downward trend for the second consecutive day, trading around 1.3640. The Canadian Dollar (CAD) is bolstered by higher US crude oil prices, contributing to the depreciation of the USD/CAD pair.
West Texas Intermediate (WTI) crude oil prices have edged higher, nearing $83.80 per barrel, supported by potential geopolitical risks associated with a potential Israeli invasion of the southern Gaza city of Rafah.
On the economic front, recent Canadian Retail Sales data for February highlighted a slowdown in economic activity. Moreover, annual inflation in Canada stood at 2.9% in March, below market expectations, indicating the possibility of subdued underlying inflation. This scenario may prompt the Bank of Canada to contemplate interest rate cuts, potentially curbing the Canadian Dollar’s gains.
Conversely, US labor market data offset sluggish GDP growth, dampening expectations for Federal Reserve interest rate adjustments. The US Gross Domestic Product Annualized (Q1) expanded at a slower rate of 1.6% compared to the previous reading of 3.4%, falling short of market projections of 2.5%. The deceleration in the US economy suggests potential challenges or slowdowns across various sectors. Looking ahead, market attention is directed towards the US Personal Consumption Expenditures (PCE) Price Index data for March, scheduled for release on Friday.
Furthermore, US Initial Jobless Claims for the week ending on April 19 witnessed a significant decline, decreasing by 5,000 to 207,000. This figure marks the lowest level seen in two months, surpassing both market forecasts of 214,000 and the previous reading of 212,000. The unexpected decrease in jobless claims indicates a strengthening labor market, implying reduced layoffs and potentially increased hiring activity.
