Ella 
In early Asian trading on Friday, USD/CAD was trading around 1.3620. USD/CAD rose as demand for the U.S. dollar (USD) revived as the Federal Reserve emphasized its cautious stance of “maintaining higher interest rates for a longer period of time.”
On Thursday, data released by the U.S. Bureau of Labor Statistics (BLS) showed that 222,000 people filed for initial unemployment benefits in the United States in the week ended May 11, compared with the previous value of 232,000 and higher than the expected value of 220,000. Housing starts rose 5.7% monthly in April to 1.36 million units, while building permits fell 3% monthly in April to 1.44 million units. However, the economic data were mixed and had little impact on the U.S. dollar as traders were focused on speeches from Federal Reserve officials regarding rate cuts.
On Thursday, Atlanta Fed President Raphael Bostic said he had seen signs of a pullback in inflation from recent economic data, but he preferred to watch data from May and June to ensure that inflation did not rebound. Meanwhile, Cleveland Fed President Loretta Mester said she would like to see more data to gain confidence that inflation is on track to hit its 2% target.
Richmond Fed President Tom Barkin said the Fed needs to keep borrowing costs higher for longer to keep inflation on track to achieve its target, citing rising prices in the services sector. . The Chicago Mercantile Exchange’s FedWatch tool shows that financial markets are currently pricing in a probability of the Fed cutting interest rates in September at nearly 70%, up from 65% earlier this week.
In terms of the Canadian dollar, Statistics Canada announced on Wednesday that Canada’s manufacturing sales fell by -2.1% on a monthly basis in March, compared with an increase of 0.9% in February, which was weaker than market expectations of -1.4%. Elsewhere, a sustained rebound in oil prices could boost the commodity-linked Canadian dollar (CAD) and cap USD/CAD as Canada is the largest oil exporter to the United States.
