Ella 
USD/CAD posted gains for the second consecutive session on Friday. U.S. consumer inflation data came in better than expected on Wednesday, reducing the chances that the Federal Reserve will cut interest rates soon. U.S. producer inflation data released on Thursday further bolstered that sentiment. As a result, USD/CAD is trading higher near 1.3540 at press time.
The U.S. dollar index (DXY) benefited from the hawkish sentiment of the Federal Reserve, which is considering delaying the implementation of higher interest rates as inflationary pressures persist. U.S. Treasury yields have risen for four consecutive sessions, providing support for the U.S. dollar (USD). The U.S. dollar index is still rising, near 103.40, with the two-year U.S. Treasury yield and the 10-year U.S. Treasury yield revised to 4.68% and 4.28% respectively.
The U.S. core producer price index (PPI) remained stable in February at an annual rate of 2.0%, beating expectations of 1.9%. The U.S. producer price index (year-on-year) increased by 1.6%, exceeding expectations of 1.1% and the previous value of 1.0%.
U.S. retail sales rose 0.6% month-on-month in February, lower than expectations for a 0.8% increase and a rebound from the previous decline of 1.1%. The retail sales control group’s monthly rate was 0.0%, an improvement from the previous value of 0.3%. Traders are likely to keep a close eye on the preliminary reading of the U.S. Michigan consumer confidence index for March due out on Friday.
WTI oil prices rose for a third day in a row, buoyed by signs of strong U.S. demand and an optimistic outlook for global consumption in 2024. This positive trend in crude oil prices is likely to provide support for the Canadian dollar (CAD) as Canada is the largest oil exporter to the United States. Therefore, this may halt the USD/CAD upside potential.
Canada’s January manufacturing sales rebounded to 0.2% on Thursday, but were below expectations of 0.4%. That is, a rebound after the indicator recorded -1.1% (revised -0.7%) last month. Focus turns to housing starts and wholesale sales data scheduled for release on Friday.
