Anna 
The USD/CAD pair rebounded during the European session on Friday, recovering from previous losses and reaching around 1.3360. The U.S. dollar (USD) showed signs of retracing recent declines, hovering around 102.50, supported by a rise in U.S. Treasury yields and positive labor data released on Thursday. Despite the dollar’s recovery, the Canadian dollar (CAD) received support from higher crude oil prices.
As of the latest update, the 2-year and 10-year U.S. Treasury yields were at 4.39% and 4.00%, respectively. The positive employment data, particularly the ADP employment report, exceeded expectations by adding 164,000 jobs in December, contributing to the limited decline in the USD. Additionally, initial jobless claims dropped to 202,000 for the week ending December 29, down from the previous figure of 220,000.
The Canadian dollar strengthened due to the upward movement in crude oil prices, with West Texas Intermediate (WTI) crude trading higher around $72.70 per barrel. However, concerns about demand stability arose as U.S. gasoline and distillate inventories surged, putting pressure on WTI prices.
Market attention is now focused on key economic data releases. Canada is set to report December’s unemployment rate and net employment changes, while the United States awaits data on average hourly earnings and nonfarm payrolls (NFP). These releases are expected to significantly impact market sentiment and provide valuable insights into the labor market dynamics of both countries.
