USD/CAD edges higher above 1.3600 on firmer US Dollar, Fed’s cautious tones
|- USD/CAD holds positive ground near 1.3620 in Friday’s early Asian session.
- Several Fed officials emphasized their cautious stance to keep the rate higher for longer, lifting the USD.
- The recovery in oil prices is likely to cap the commodity-linked Canadian Dollar.
The USD/CAD pair trades on a stronger note around 1.3620 on Friday during the early Asian trading hours. The uptick of the pair is bolstered by the renewed US Dollar (USD) demand as the US Federal Reserve (Fed) officials emphasized their cautious stance to hold rates higher for longer.
On Thursday, the US weekly Initial Jobless Claims for the week ending May 11 came in at 222,000 from the previous week of 232,000, above the market consensus of 220,000, according to the US Bureau of Labor Statistics (BLS). Housing Starts climbed 5.7% MoM to 1.36 million in April, while Building Permits declined by 3% MoM in April to 1.44 million. However, these mixed reports had little to no impact on the Greenback as traders kept an eye on the Fed official's remarks about the interest rate cuts.
Atlanta Fed President Raphael Bostic stated on Thursday that he saw signs of cooling inflation in the recent report, but he prefers to watch the May and June data to make sure the inflation doesn’t turn back the other way. Meanwhile, Cleveland Fed President Loretta Mester said she wants to see more data to gain confidence that inflation is on course to meet the Fed’s 2% target.
Richmond Fed President Tom Barkin noted the central bank needs to keep borrowing costs high for longer to ensure inflation is on track to its target, citing higher prices in the services sector. Financial markets are currently pricing in nearly 70% odds of a Fed rate cut in September, an increase from 65% earlier in the week, according to the CME FedWatch Tool.
On the Loonie front, Canada’s Manufacturing Sales fell 2.1% MoM in March from a 0.9% rise in February, weaker than the market expectation of a decline of 1.4%, Statistics Canada showed Wednesday. Elsewhere, the extended rebound in oil prices might lift the commodity-linked Canadian Dollar (CAD) and cap the upside of the pair as Canada is the largest oil exporter to the United States.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.