Photo by Michelle Spollen on Unsplash

The USD/CAD pair loses ground to near 1.3890 during the Asian trading hours on Friday. The Canadian Dollar (CAD) strengthens against the Greenback amid the rebound in crude oil prices. Traders will take more cues from the US December Industrial Production report and the Fedspeak later on Friday. 

Reuters reported on Friday that Ukraine has ramped up attacks on Russian tankers, with at least six tankers targeted by drones and missiles in the Baltic Sea. Rising geopolitical risks boost crude oil prices and provide some support to the commodity-linked Loonie. It is worth noting that Canada is a major oil-exporting country, and high crude oil prices generally have a positive impact on the CAD. 

On the other hand, signs of improvement in the US labor market, along with the robust Retail Sales data released earlier this week, support the case that the US Federal Reserve (Fed) will keep rates on hold for the next several months. This, in turn, could underpin the Greenback in the near term. Morgan Stanley analysts pushed back their expectations for rate cuts to June and September, from January and April, after the US December jobs data.

Chicago Fed President Austan Goolsbee said Thursday that amid ample evidence of stability in the job market, the central bank should be focused on getting inflation down. Meanwhile, San Francisco Federal Reserve President Mary Daly stated that monetary policy is “in a good place” to respond to economic shifts.

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