- USD/CAD holds steady as strong US data bolsters expectations that the Fed will keep rates on hold.
- US Retail Sales rose 0.6% to $735.9 billion in November, beating expectations after October’s 0.1% decline.
- The commodity-linked CAD finds support as WTI Oil prices rise amid persistent tensions in Iran.
USD/CAD remains in the positive territory for the third successive session, trading around 1.3890 during the Asian hours on Thursday. The pair holds ground as the US Dollar (USD) receives support from stronger-than-expected US economic data. Traders will monitor the weekly US Initial Jobless Claims report later on Thursday, alongside remarks from Federal Reserve officials.
The US Census Bureau reported on Wednesday that Retail Sales rose more than expected to $735.9 billion in November, up 0.6%, following a 0.1% contraction in October and beating market expectations of a 0.4% increase. Meanwhile, the Producer Price Index (PPI) came in hot in November, with both headline and core measures reaching 3% year-over-year (YoY).
Together with last week’s data showing the US Unemployment Rate easing to 4.4% in December, these releases reinforce the case for the US Federal Reserve (Fed) to keep interest rates on hold for the coming months, potentially supporting the US Dollar (USD). In response, Morgan Stanley analysts delayed their expectations for rate cuts to June and September from January and April following Friday’s jobs report.
The upside of the USD/CAD pair could be restrained as the commodity-linked Canadian Dollar (CAD) receives support from higher Oil prices, given the status of Canada’s largest crude exporter to the United States (US). West Texas Intermediate (WTI) Oil price is trading around $60.20 at the time of writing. Crude Oil prices gain ground amid persistent tensions in Iran. Traders will closely monitor the latest geopolitical developments surrounding the Iranian civil unrest.
