The US Dollar to Canadian Dollar (USD/CAD) exchange rate edged slightly lower on Friday as oil prices firmed and US dollar weakness persisted across major pairs.
Dollar to Canadian Dollar (USD/CAD): 1.3647
Euro to Dollar (EUR/USD): 1.1818
Pound to Dollar (GBP/USD): 1.3484
DAILY RECAP:
USD/CAD closed Friday at 1.36485, down 0.21% from Thursday’s session, as crude oil prices extended their recent rally to multi-week highs.
West Texas Intermediate crude climbed above $82 per barrel on Friday, bolstering the Canadian dollar given Canada’s status as a major oil exporter.
Rising oil prices typically strengthen the loonie as they boost export revenues and improve the country’s terms of trade.
The US dollar faced headwinds across the board as investors digested dovish comments from Federal Reserve officials earlier in the week.
Fed Chair Jerome Powell’s Thursday speech reinforced expectations that interest rate cuts remain on the table if economic conditions warrant further monetary easing.
Money markets are now pricing in a higher probability of Fed rate cuts later this year, weighing on the greenback’s appeal.
The pair has now declined for three of the past four trading sessions, falling from above 1.37 earlier this week to current levels near 1.3650.
February is tracking as a positive month for USD/CAD despite Friday’s decline, with the pair still up from January’s close of 1.3624.
Near-Term USD/CAD Forecast: US PCE Data and Canadian GDP in Focus
Next week brings several key data releases that could drive USD/CAD direction, starting with Tuesday’s US Personal Consumption Expenditures price index for January.
The PCE report serves as the Fed’s preferred inflation gauge and any softer-than-expected reading could reinforce bets on Fed policy easing, pressuring the dollar lower.
Markets expect core PCE to show continued disinflation, which would support the case for maintaining current accommodative monetary policy.
On the Canadian side, Thursday’s fourth quarter GDP figures will provide crucial insight into the economy’s momentum heading into 2026.
Economists forecast modest growth that would keep the Bank of Canada on hold, but any significant deviation from expectations could move the loonie.
Oil market developments remain critical given their outsized influence on the Canadian dollar, with OPEC+ production decisions and Middle East tensions continuing to support crude prices at elevated levels.
