Photo by Michelle Spollen on Unsplash

• USD/CAD softens to around 1.3955 in Friday’s early Asian session.
• US economic data support Fed rate cut bets.
• Lower crude oil prices might weigh on the Loonie and cap the upside for the pair. 

The USD/CAD pair loses ground to near 1.3955 during the early Asian session on Friday. The Greenback weakens against the Canadian Dollar (CAD) as US economic data fueled speculation that the Federal Reserve (Fed) will resume interest rate cuts in the coming months.

Another soft inflation print suggested that companies are absorbing some of the hit from higher tariffs. Data released by the Bureau of Labor Statistics on Thursday showed that the US Producer Price Index (PPI) rose 2.4% YoY in April, following the 2.7% increase in March. This figure came in below the market expectation of 2.5%. 

Meanwhile, the annual core PPI rose 3.1% in April versus 4% prior. On a monthly basis, the PPI and the core PPI declined 0.5% and 0.4%, respectively. Swaps trader increased their bets on further Fed rate cuts this year, which undermines the US Dollar (USD) broadly. 

The US Initial Jobless Claims for the week ending May 10 came in at 229K, compared to the previous week's revised tally of 229K (revised from 228K), according to the US Department of Labor (DOL) on Thursday. This reading matched initial estimates. Additionally, Continuing Jobless Claims went up by 9K to reach 1.881M for the week ending May 3.

A decline in Crude Oil prices might cap the upside for the commodity-linked Loonie and create a tailwind for the pair. It’s worth noting that Canada is the largest oil exporter to the US, and lower crude oil prices tend to have a negative impact on the CAD value. 

More By This Author: