USD/CAD stays at 1.4000, US jobs data and Fed speakers dominate

In early Asian trading on Thursday, USD/CAD fell to around 1.3970, with the U.S. dollar falling slightly during the session. Traders will be closely watching U.S. jobless claims last week, the Philadelphia federal manufacturing index, existing home sales and the Conference Board leading index, which will be released later on Thursday. In addition, Fed officials Hammack and Goolsby will also speak.

Recent strong US economic data, sticky inflation and Donald Trump's victory in the US presidential election have temporarily supported the trend of the US dollar (USD) against the Canadian dollar (Loonie). Markets expect Donald Trump's administration to reignite inflation and slow the Federal Reserve's path to interest rate cuts.

In addition, the cautious tone maintained by Fed officials' speeches may prevent the dollar from falling. On Wednesday, Federal Reserve Governor Michelle Bowman emphasized that inflation has been rising over the past few months and the Fed needs to be cautious about cutting interest rates.

Futures traders have scaled back expectations for a rate cut at the Fed's December meeting, the CME FedWatch tool showed. Their current probability of the Fed cutting interest rates by 25 basis points is around 54%, down from around 80% last week.

On the Canadian dollar front, lower crude oil prices weighed on the commodity-linked Canadian dollar (CAD). That said, lower expectations that the Bank of Canada (BOC) will cut interest rates in December could help limit the Canadian dollar's losses. Market odds of a 50 basis point (bps) interest rate cut by the Bank of Canada next month have now fallen to nearly 26%, down from 37% before the release of the inflation data.