- USD/CAD snaps a two-day losing streak on improved Greenback.
- Weaker Crude Oil prices are weighing on the Canadian Dollar.
- US Dollar gains ground, driven by investors possibly adopting a cautious stance.
USD/CAD recovers recent losses registered in the previous two sessions, trading higher near 1.3700 during the Asian session Thursday. The USD/CAD pair receives upward support, propelled by the strengthened US Dollar (USD), which could be attributed to possible risk-on sentiment. Additionally, the decline in Crude Oil prices contributes to this movement, especially considering Canada’s status as the largest oil exporter to the United States (US).
The USD/CAD pair experienced losses after the economic data was released from the United States (US) on Wednesday. The US Producer Price Index (PPI) unexpectedly declined by 0.5% compared to the anticipated 0.1% increase. The annual PPI also dropped from 2.2% to 1.3%.
These figures align with the softer inflation highlighted by Tuesday’s inflation data. This alignment increases the likelihood of the US Federal Reserve (Fed) refraining from implementing an interest rate hike in the December meeting.
On Canada’s side, the declines in Crude Oil prices are bolstering the strength of the USD/CAD pair. West Texas Intermediate (WTI) Oil price trades lower near $76.10 per barrel at the time of writing.
Additionally, stronger Canada’s economic data could have provided support for the Canadian Dollar (CAD). Manufacturing Sales (MoM) showed an increase of 0.4% against the expected decline of 0.1% in September. Wholesale Sales month-over-month also improved to 0.4% from 1.8%.
Investors will focus now on weekly US Jobless Claims on Thursday, seeking further impetus on the condition of the US labor market. Canada’s Housing Starts (YoY) will also be eyed.