- USD/CAD oscillates around the 1.3678-1.3686 station in a narrow trading band.
- US weekly Initial Jobless Claims came in better than the market expectation.
- Canadian Ivey Purchasing Managers Index (PMI) for August came in at fifty three.5 vs. forty eight.6 prior.
- The Canadian labor data shall be intently watched events.
The USD/CAD pair consolidates its latest gains around 1.3680 during the early Asian session on Friday. The major pair retraces from 1.3694, the absolute top level since March and essentially the most important resistance level is viewed at 1.3700 area.
The US Dollar (USD) gained traction to the absolute top level since early March above the 105.00 area following the US financial data on Thursday. The US Department of Labor on Thursday reported that the US Initial Jobless Claims totaled 216,000 in the week ending September 2. This determine came in better than the market consensus of 234,000 and adopted the outdated week’s revised determine of 229,000 (from 228,000). Meanwhile, Nonfarm Productiveness rose by 3.5%, beneath the three.8% market estimation and revised from the first estimate of 3.7%.
Light York Federal Reserve (Fed) President John Williams stated that inflation is heading in the fair route while adding that he requires additional information sooner than making a determination. , Chicago’s Fed President Austan Goolsbee said the Fed may achieve the golden path, where inflation erases but a recession is avoided.
That said, the US financial data lends make stronger to the upper for longer interest rate narrative, which boosts the Greenback across the board. According to the CME FedWatch Instrument, markets have priced in a 93% risk of holding the interest rate at the September meeting, while the odds of a rate hike in its November meeting is around 51%.
On the opposite hand, Bank of Canada (BoC) Governor Tiff Macklem stated on Thursday that monetary coverage may be appropriately restrictive to restore stamp stability, but cautioned that the Governing Council is anxious with the persistence of underlying inflation. It’s value noting that BoC determined to maintain its key interest rate at 5% on Wednesday’s coverage meeting.
About the data, the Canadian Ivey Purchasing Managers Index (PMI) for August came in at fifty three.5 from forty eight.6 in the outdated reading. The determine was better than expected at 49.2. It’s value noting that the quantity above 50 indicates expansion in the business activity. In response to the data, the Canadian Dollar (CAD) gains floor against the USD. Nonetheless, a decline in oil prices restricted Loonie’s upside as Canada is the largest exporter of wrong to the US.
Moving on, market players await Canada’s labor data due on Friday for unusual impetus. Markets anticipate that the Canadian economy will add 15,000 jobs in August. The weaker-than-expected data may exert some stress on the Loonie. Also, Canada’s Unemployment Rate for August shall be due on the same day. These data may give a clear route for the USD/CAD pair.
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