Ella 
USD/CAD regained some ground in Asia on Friday. The USD/CAD rebound was supported by a slight gain in the U.S. dollar (USD) and lower oil prices. However, the bearish outlook for USD/CAD remains unchanged, with the daily chart showing USD/CAD trading below the key 100-day exponential moving average (EMA). USD/CAD is currently trading around 1.3230, up 0.02% on the day.
Oil prices continued to fall on Friday amid concerns about crude supply disruptions. This has therefore put some selling pressure on the commodity-linked Canadian dollar.
The Bank of Canada (BOC) said in a statement from its December meeting that the board felt more optimistic about Canada’s inflation outlook and left the door open to further interest rate increases. However, the Consumer Price Index (CPI) did not fall back in November, which may suggest that the chances of another rate hike have declined.
On the other hand, investors expect U.S. interest rates to be cut next year. The Fed kept interest rates unchanged at 5.25%-5.50% at its final meeting of the year. Federal Reserve Chairman Jerome Powell said the timing of rate cuts will be the Fed’s “next question.” The Fed’s shift to a dovish stance has dragged the U.S. dollar lower across the board, and U.S. bond yields have also fallen.
The number of initial jobless claims announced by the U.S. Department of Labor on Thursday was lower than expected. The number of initial jobless claims for the week as of December 23 was 218,000, compared with 206,000 last week, which was lower than the 210,000. Meanwhile, U.S. existing home sales were flat at 0%, missing expectations of 1.0%.
The U.S. Chicago Purchasing Managers Index (PMI) for December is due later on Friday and is expected to fall to 51.0 from 55.8. As the 2024 holidays approach, the market is expected to remain quiet.
