USD\/CAD traded lower near 1.3695 in early European trading on Friday, as the Canadian Dollar strengthened with higher crude oil prices. Markets awaited Canadian Retail Sales, plus the US advance Q4 GDP report and the US PCE Price Index.<\/p>\n
Geopolitical risks lifted oil prices, supporting the oil-linked Canadian Dollar. US President Donald Trump said Iran had 10 to 15 days to reach a deal over its nuclear programme, and warned of \u201creally bad things\u201d if no deal is reached.<\/p>\n
US data also influenced the pair, as stronger figures can support the US Dollar and a hawkish Federal Reserve outlook. US Initial Jobless Claims fell to 206,000 for the week ending February 14, below the 225,000 forecast and down from the prior week\u2019s revised 229,000.<\/p>\n
Later on Friday, the US PCE inflation data for December and a preliminary Q4 GDP reading were due. Weaker-than-expected results could weigh on the US Dollar in the near term.<\/p>\n
The Canadian Dollar is influenced by Bank of Canada interest rates, oil prices, economic growth, inflation, and the trade balance. The BoC targets inflation of 1-3% and can also use quantitative easing or tightening to affect credit conditions.<\/p>\n
The USD\/CAD pair is currently showing weakness around the 1.3700 mark as the Canadian dollar finds support from rising crude oil prices. This creates a classic conflict for the currency pair, pitting strong commodity prices against a resilient US dollar. Traders should be prepared for volatility as these two major forces battle for dominance in the coming weeks.<\/p>\n
We see strength in the commodity-linked loonie due to persistent supply concerns in the energy market, with West Texas Intermediate crude holding above $82 per barrel. Just as we saw geopolitical tensions in the Persian Gulf impact oil throughout 2025, current OPEC+ production discipline is keeping prices firm. As Canada is a major oil exporter, this price strength provides a fundamental tailwind for the Canadian dollar.<\/p>\n
On the other hand, the US dollar continues to be supported by a strong American economy and a cautious Federal Reserve. Recent data showed US jobless claims holding steady near a low of 210,000, and the latest Core PCE inflation reading for January came in at 2.9%, slightly higher than anticipated. This persistent, albeit moderating, inflation is causing markets to scale back expectations for aggressive Fed rate cuts in 2026.<\/p>\n
Looking ahead, we are watching for Canada’s upcoming monthly GDP figures and the next Bank of Canada policy meeting for domestic cues. Meanwhile, the US Non-Farm Payrolls report in early March will be a critical data point that could shift the Fed\u2019s outlook significantly. These events are likely to be major catalysts for the USD\/CAD exchange rate.<\/p>\n
This tug-of-war between a hawkish Fed and high oil prices suggests the pair may remain in a range, but with the potential for sharp moves on surprising data. This environment is favorable for traders using options to play either volatility or defined ranges ahead of key data releases. Be wary of chasing breakouts until a clear fundamental picture emerges from one side or the other.<\/p>\n
We only need to look back to the market action in 2025 when unexpected inflation data caused the Fed to signal a “higher for longer” stance, strengthening the US dollar rapidly. That period showed how quickly sentiment can shift, punishing traders who are not prepared for both sides of the USD\/CAD story. A similar dynamic is at play now, demanding a nimble approach.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" USD\/CAD dips to 1.3695 as oil boosts Canadian Dollar; traders await Canada retail sales, US GDP, PCE.<\/p>\n","protected":false},"author":62,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-42385","post","type-post","status-publish","format-standard","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts\/42385","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/comments?post=42385"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts\/42385\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/media?parent=42385"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/categories?post=42385"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/tags?post=42385"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}