During the Asian trading session on Friday, the USD/CAD pair inched higher to approach 1.3690. The uptick in the pair was supported by a corrective movement in the US Dollar (USD), driven by the prevailing hawkish sentiment surrounding the Federal Reserve (Fed) and its inclination towards maintaining higher interest rates over an extended period.
Nevertheless, the Greenback encountered resistance stemming from lower US Treasury yields, attributed in part to the disappointing US Initial Jobless Claims data released on Thursday. According to the US Bureau of Labor Statistics (BLS), the number of individuals filing for unemployment benefits for the week ending May 3 exceeded expectations, reaching 231,000 compared to estimates of 210,000. This figure represented an increase from the previous week’s reading of 209,000.
Looking ahead, market participants are eyeing the release of the preliminary Michigan Consumer Sentiment Index for May on Friday, with forecasts suggesting a marginal decline. This index serves as a gauge of consumer sentiment in the US, covering aspects such as personal finances, business conditions, and purchasing conditions.
On the Canadian front, the Bank of Canada (BoC) unveiled its Financial System Review (FSR) on Thursday. BoC Governor Tiff Macklem emphasized the resilience of Canada’s financial system while cautioning about potential market volatility as expectations evolve regarding the timing and magnitude of rate adjustments. Deputy Governor Carolyn Rogers noted a rise in small business insolvencies but downplayed broader economic implications.
The Canadian Dollar (CAD) may find support from improved crude oil prices, given Canada’s status as a leading oil exporter to the United States. Western Texas Intermediate (WTI) crude oil prices hover around $79.40 on Friday, buoyed by optimism surrounding increased demand from China and the US, the world’s largest consumers of crude oil.
