The USD/CAD pair extended its upside on Friday, trading around 1.4020 during the Asian session after posting modest gains in the previous day. The pair strengthened as the US dollar (USD) advanced, supported by a cautious market tone ahead of the delayed release of September’s US Consumer Price Index (CPI) data. The ongoing US government shutdown, which has caused a temporary data blackout, continues to weigh on investor sentiment.
Risk aversion boosts the greenback
The greenback drew additional support from safe-haven demand as traders turned risk-averse ahead of key macroeconomic releases. Market participants also reacted to comments from US President Donald Trump, who said he expects to finalize “several agreements” with Chinese President Xi Jinping during their meeting in South Korea next week. The White House confirmed the meeting will take place on October 30 on the sidelines of the Asia-Pacific Economic Cooperation (APEC) Summit, according to Reuters.
US government shutdown adds uncertainty
Despite the dollar’s current strength, analysts caution that prolonged political gridlock in Washington could limit upside momentum. The US government shutdown has now entered its 24th day, marking the second-longest funding lapse in history.
The GOP-backed stopgap bill failed to pass the Senate for the 12th consecutive time on Wednesday evening, delaying key data releases such as Nonfarm Payrolls (NFP) and adding further uncertainty for financial markets and the Federal Reserve (Fed).
Weaker oil prices pressure the Canadian dollar
The Canadian dollar (CAD) came under pressure amid softer crude oil prices, a key export for Canada. West Texas Intermediate (WTI) crude fell after three consecutive sessions of gains, trading near $61.00 per barrel at the time of writing.
The decline in oil prices weighed on the commodity-linked loonie, although downside risks may remain limited due to supply concerns following new US sanctions on Russia’s major oil producers, Rosneft and Lukoil.
