The U.S. dollar strengthened against the Canadian dollar early today, with the USD/CAD extending its weekly gains to the 1.3710 level. The move comes ahead of the release of Canada’s retail sales report and amid a recovery in West Texas Intermediate (WTI) crude oil prices, which have risen to $76.50. The rise in oil prices typically supports the Canadian dollar, known as the loonie, but market volatility spurred by OPEC+ delays has tempered the gains.
Bank of Canada Governor Tiff Macklem suggested that existing policies may be sufficient to manage inflation, hinting at a possible pause in rate hikes. This stance echoes that of the Federal Reserve, which has also hinted at a possible pause in its aggressive rate hikes, which could fuel risk-on sentiment and put downward pressure on the USD/CAD.
Meanwhile, the US Dollar Index, which tracks the greenback against a basket of other major currencies, has risen to 103.80. This rise is being supported by a jump in U.S. Treasury yields, with the 10-year yield reaching 4.46% and the 2-year yield climbing to 4.94%. Investors are closely monitoring these developments, as well as the expected slight decline in the S&P Global PMI data for November, for further insight into the health of key sectors within the U.S. economy.
