The USD/CAD pair experienced losses for the second consecutive day on Friday, trading around 1.3640 during the Asian session. The Canadian Dollar (CAD) weakened against the US Dollar (USD) due to higher US crude oil prices. West Texas Intermediate (WTI) crude oil prices rose to nearly $83.80 per barrel, supported by geopolitical risks related to a potential Israeli invasion of Rafah city.
Recent Canadian economic data showed a slowdown in economic activity, with lower-than-expected retail sales in February and annual inflation below expectations at 2.9% in March. This could lead the Bank of Canada to consider interest rate cuts, which may limit the strength of the Canadian Dollar.
On the other hand, US labor data offset concerns about slow GDP growth, with the US economy expanding at a slower pace of 1.6% in the first quarter of the year. Despite falling short of market expectations, the decrease in jobless claims by 5,000 to 207,000 for the week ending on April 19 indicates a strengthening labor market, potentially leading to reduced layoffs and increased hiring activity. Market attention is now focused on the US Personal Consumption Expenditures (PCE) Price Index data for March, set to be released on Friday.