USD/CAD consolidates near 1.3480 amid lower Crude oil prices

• USD/CAD hovers around Thursday’s close of 1.3481.
• The lower WTI oil price puts pressure on the Canadian Dollar.
• The US Dollar cheered the mixed US PMI data, which indicated economic expansion.
• US Initial Jobless Claims dropped to 201K, lower than the expected 218K and 213K prior.

USD/CAD remains silent with a bias towards extending its losses for the third successive session, hovering around 1.3480 during the Asian session on Friday. The USD/CAD pair loses ground as the US Dollar (USD) remains subdued amidst speculation of potential interest rate cuts by the Federal Reserve (Fed). Additionally, the Canadian Dollar (CAD) received upward support following the release of mixed Retail Sales data from Canada on Thursday.

Statistics Canada released Retail Sales (MoM), indicating a 0.9% improvement in December, surpassing the anticipated 0.8% reading. This increase, compared to the previous flat reading of 0.0% in November, suggests higher sales volumes for retailers. However, monthly Retail Sales excluding Autos grew by 0.6%, slightly below the market expectation of 0.7%, yet marking a significant rebound from the previous decline of 0.4%.

However, the decline in the Crude oil prices could have weighed on the Canadian Dollar, consequently, limiting the losses of the USD/CAD pair. West Texas Intermediate (WTI) oil price edges lower to near $78.10 per barrel, by the press time. The demand for Crude oil is encountering challenges due to higher interest rates globally, which are dampening economic activities.

The US Dollar Index (DXY) received upward support on Thursday as labor data from the United States demonstrated strength. The US Bureau of Labor Statistics (BLS) reported that weekly Initial Jobless Claims dropped below consensus expectations, with figures reaching 201K for the week ending on February 16, lower than the market expectation of 218K and the previous figure of 213K.

Furthermore, mixed preliminary S&P Global Purchasing Managers Index (PMI) data indicated economic expansion, reinforcing the case for the Federal Reserve to maintain elevated interest rates for a longer duration to address inflationary pressures.

In detail, S&P Global US Services PMI posted a reading of 51.3 in February, slightly below the expected 52.0 and the prior figure of 52.5. Manufacturing PMI improved to 51.5, exceeding the anticipated 50.5 and the previous figure of 50.7. However, US Composite PMI declined to 51.4 in February from the previous reading of 52.0.