- USD/CAD remains stronger as traders adopt caution ahead of the US Nonfarm Payrolls report.
- The commodity-linked Canadian Dollar weakens as Oil prices decline.
- Oil prices weaken as Chevron, Vitol, and Trafigura vie for US deals to export Venezuelan crude.
USD/CAD continues its winning streak that began on January 2, trading around 1.3870 during the Asian hours on Friday. Traders await the US Nonfarm Payrolls (NFP) report, which is expected to offer further insight into labor market conditions and the Federal Reserve’s (Fed) policy outlook. On Canada’s front, Net Change in Employment and Unemployment Rate for December will also be eyed.
The USD/CAD pair also remains stronger as the commodity-linked Canadian Dollar (CAD) struggles amid lower Oil prices. The potential for rising Venezuelan Oil supply to the United States (US) could reduce demand for Canadian heavy crude. Greater competition may pressure Canadian export volumes and price differentials, weighing on energy revenues. As Oil remains a key driver of Canada’s terms of trade, weaker crude demand could limit Canadian Dollar strength against the US Dollar (USD).
Oil major Chevron, global trading houses Vitol and Trafigura, and other firms are competing for United States (US) government deals to export Venezuelan crude, vying to market up to 50 million barrels of PDVSA’s accumulated inventories amid ongoing negotiations on Venezuelan Oil exports, per Reuters.
US Treasury Secretary Scott Bessent said in a CNBC interview on Thursday that the Federal Reserve should continue cutting rates, arguing that lower rates are “the only ingredient missing” for even stronger economic growth and that the Fed should not delay. According to the CME Group’s FedWatch tool, Fed funds futures continue to price in about an 86.2% probability that the US central bank will keep rates unchanged at its January 27–28 meeting.
