Ella 
In Asia on Thursday, USD/CAD recovered from the losses of the previous two trading days and moved higher to around 1.3700. USD/CAD found upside support on the back of a stronger U.S. dollar (USD), which could be attributed to risk-on sentiment. Additionally, falling crude oil prices have also contributed to the move, especially as Canada is the largest oil exporter to the United States.
USD/CAD fell after the release of US economic data on Wednesday. The U.S. Producer Price Index unexpectedly fell 0.5%, versus expectations for a 0.1% increase. The annual rate of the producer price index also fell from 2.2% to 1.3%.
The data matched weak inflation highlighted by Tuesday’s inflation data. The data raised the prospect of no rate hike at the Fed’s December meeting.
In Canada, lower crude oil prices supported USD/CAD strength. At press time, WTI oil prices fell to around $76.10 per barrel.
In addition, improving Canadian economic data also provided support for the Canadian dollar (CAD). Manufacturing sales rose 0.4% monthly in September, versus expectations of -0.1%. Wholesale sales also rose from 1.8% to 0.4% on a monthly basis.
Investors will now focus on Thursday’s report on initial jobless claims for last week for further signals on the state of the U.S. labor market. Canadian housing starts (annual rate) will also be watched.
