Ella 
USD/CAD is hovering around 1.3280 in Asia on Friday, close to the four-month low of 1.3275 set in the previous session. USD/CAD fell sharply on U.S. dollar weakness, which may be related to weak U.S. economic data released on Thursday. Additionally, mixed retail sales in Canada may have provided some support for the Canadian dollar (CAD).
Recent data released by the U.S. Bureau of Economic Analysis (BEA) showed that the U.S. gross domestic product (GDP) annual rate was 4.9%, slightly lower than the expected 5.2%. At the same time, core personal consumption expenditures (quarterly rate) fell to 2.0% from the previous value of 2.3%. However, 205,000 U.S. initial jobless claims were filed last week in the week ended December 15, slightly below expectations of 215,000.
Weak real GDP fueled speculation that the Federal Reserve may ease policy. The rise in these expectations comes from the Federal Reserve’s dovish stance at its latest meeting. Despite growing speculation, Federal Reserve (FED) officials have taken a balanced approach by promoting caution and discouraging premature conclusions.
In Canada, Canadian retail sales fell to 0.7% in October from 0.5% in September (revised 0.6%). However, retail sales excluding cars and auto parts rose to 0.6% from the previous reading of 0.1% (also revised down from 0.2%).
At press time, West Texas Intermediate (WTI) crude oil prices were trading higher near $74.40 a barrel, extending gains for a second straight day. The recent rise in crude oil prices can be attributed to ongoing tensions in the Middle East, especially after Houthi rebels attacked merchant ships in the Red Sea. More shipping lines, including Germany’s Hapag-Lloyd and Hong Kong’s Orient Overseas, are choosing to avoid the Suez Canal waterway.
In addition, on the geopolitical front, Angola decided to withdraw from the OPEC+ organization. Angolan oil minister says OPEC does not serve Angola’s interests.
Market participants will focus on Canada’s October GDP (monthly rate), which is expected to improve. In the United States, the core PCE price index and Michigan consumer confidence index will be released on Friday.
