The USD/CAD pair rose to around 1.3690 during Asian trading on Friday as the US Dollar strengthened. This was due to expectations that the Federal Reserve would maintain higher interest rates for a longer period. However, the Greenback faced challenges as US Treasury yields fell following weak Initial Jobless Claims data released on Thursday. The number of individuals filing for unemployment benefits exceeded expectations, with claims rising to 231,000.
In Canada, the Bank of Canada (BoC) released its Financial Stability Report, highlighting the resilience of the country’s financial system. BoC Governor Tiff Macklem warned of potential market volatility as expectations around rate cuts evolve. He also noted that financial institutions need to adjust to higher rates and potential shocks to ensure financial stability. Deputy Governor Carolyn Rogers mentioned a rise in insolvencies among small businesses but stated that it did not pose broader risks to the Canadian economy.
The Canadian Dollar may find support from improved crude Oil prices, with Canada being a major Oil exporter to the US. Western Texas Intermediate (WTI) Oil traded around $79.40 on Friday, driven by optimism about rising demand in China and the US. This could limit the advance of the USD/CAD pair.