Ella 
USD/CAD halted two days of gains and was trading around 1.3720 during the Asian session on Friday. The Canadian dollar (CAD) was supported by improving risk sentiment as a stronger-than-expected recovery in U.S. retail sales eased concerns about a potential U.S. recession.
The commodity-linked Canadian dollar is likely to continue higher as crude oil prices are expected to end the week higher. The Canadian dollar also rose after recent U.S. economic data boosted optimism about demand from the world’s largest oil consumer. Canada is the largest exporter of crude oil to the United States. At the time of writing, the price of West Texas Intermediate (WTI) oil was trading around $76.60 per barrel.
In the U.S., traders were awaiting preliminary U.S. Consumer Sentiment Index for August and July building permit data due later in Friday’s North American session.
The U.S. dollar (USD) weakened as traders fully priced in expectations of a 25 basis point interest rate cut by the U.S. Federal Reserve in September. However, the possibility of a 50 basis point rate cut remains, with the CME FedWatch tool showing a 26% chance of a rate cut.
However, recent U.S. data released on Thursday were better than expected, providing support for the dollar. U.S. retail sales climbed 1.0% monthly in July, a sharp reversal from a 0.2% decline in June and beating expectations for a 0.3% gain, the U.S. Census Bureau reported. Additionally, initial jobless claims came in at 227,000 for the week ended Aug. 9, below expectations of 235,000 and down from 234,000 the previous week.
