The Canadian Dollar weakens against the USD near 1.3740 as crude prices dip and US retail sales data bolsters Fed rate hike expectations.
USD/CAD climbed for the eighth consecutive session, trading near 1.3740 in Asian hours Friday. The Canadian Dollar faced pressure as crude oil prices eased following reports of 30 vessels safely passing through the Strait of Hormuz, reducing immediate supply concerns. However, lingering geopolitical risks in the Middle East kept oil markets volatile, weighing on the commodity-linked CAD.
US Retail Sales rose 0.5% month-over-month in April, exceeding expectations and reinforcing the Federal Reserve’s hawkish stance. The resignation of Fed Governor Stephen Miran and the anticipated appointment of Kevin Warsh as Fed Chair further fueled speculation of prolonged high interest rates or additional hikes. These factors strengthened the USD against major peers, including the CAD.
Market anxiety persists over potential disruptions in oil supply routes, maintaining a risk premium on crude. The CAD’s vulnerability reflects its dependence on energy exports, particularly to the US, amid shifting monetary policy dynamics.