Ella 
USD/CAD is still facing some selling pressure around 1.3690 in early Asian trading on Friday. The pair is moving lower despite the U.S. Dollar Index (DXY) rising to a four-day high around 105.70. A rebound in crude oil prices continues to support the commodity-linked Canadian dollar. Focus on the latest S&P Global Purchasing Managers Index (PMI) flash readings on Friday.
Policymakers at the U.S. Federal Reserve (Fed) have delayed the timing of the first rate cut this year. Tom Barkin, president of the Richmond Fed, said on Thursday that the central bank is ready with the necessary firepower but will learn more in the coming months. Meanwhile, Minneapolis Fed President Neel Kashkari noted that it may take a year or two for inflation to return to 2%, according to Reuters.
Financial markets have priced in a rate cut probability of around 10% in July, rising to nearly 70% in September and nearly 100% in November, according to the CME FedWatch Tool. While recent U.S. retail sales data last week sparked expectations of two rate cuts by the Fed this year, Fed officials’ strict reliance on data could limit the dollar’s downside against other currencies.
On the Canadian dollar front, crude oil markets extended gains on renewed hopes of higher fuel demand in the summer. Notably, higher oil prices could support the Canadian dollar (CAD) as Canada is a major crude oil exporter to the United States.
In addition, the Bank of Canada (BOC) cut its policy rate from 5% to 4.75% on June 5, the first cut in four years. The Bank of Canada’s deliberations summary on Wednesday noted the risks of cutting rates too early and the dangers of waiting too long. Bank of Canada Governor Tiff Macklem said it was “reasonable” to expect further rate cuts, but the decline in rates would likely be gradual.
