Ella 
USD/CAD recouped the losses recorded in the previous session, moving higher to around 1.3360 during the European session on Friday. The U.S. dollar (USD) appears to have retraced its recent losses, hovering around 102.50, as U.S. Treasury yields rose, coupled with better U.S. labor data on Thursday. However, higher crude oil prices may provide support to the Canadian dollar (CAD).
As of press time, the 2-year and 10-year U.S. Treasury yields were 4.39% and 4.00% respectively. In addition, positive employment data released on Thursday also provided support to limit the dollar’s decline. U.S. ADP employment increased significantly in December, adding 164,000 jobs, beating market expectations of 115,000. Initial jobless claims fell to 202,000 for the week ended Dec. 29, down from 220,000 previously.
The Canadian dollar (CAD) strengthened on rising crude oil prices. West Texas Intermediate (WTI) crude oil prices have recouped recent losses and are trading higher at around $72.70 per barrel at the time of writing. However, WTI came under downward pressure as U.S. gasoline and distillate inventories surged, raising concerns about demand stability.
Canada will report December’s unemployment rate and net employment changes on Friday. Meanwhile, in the United States, all eyes are on average hourly earnings and nonfarm payrolls (NFP) data. The release of these data is likely to have a significant impact on market sentiment and provide insight into labor market dynamics in both countries.
