The USD/CAD pair is showing slight gains near 1.3740 in the early Asian session on Friday, breaking a five-day losing streak. The increase in the pair is driven by the stronger US Dollar (USD) following positive Initial Jobless Claims data.
Last week, initial claims for unemployment insurance came in lower than expected, easing concerns about the US labor market. The Department of Labor reported that initial jobless claims for the week ending August 3 rose by 233,000, compared to 250,000 the previous week. This upbeat reading has provided support to the Greenback against the Loonie.
Market expectations point towards a potential interest rate cut by the Federal Reserve (Fed) in the coming months. Traders have priced in a 57.5% chance of a 50 basis point cut at the September meeting. However, a deeper rate cut expectation could limit the USD/CAD pair’s upward momentum in the near future.
Meanwhile, the Bank of Canada (BoC) has already cut interest rates at its July meeting and is hinting at further easing of monetary policy. Analysts forecast additional rate reductions in the upcoming months. The key focus for traders will be the Canadian employment report scheduled for later on Friday, with projections indicating job growth but a slight increase in the Unemployment Rate.
Factors influencing the Canadian Dollar (CAD) include interest rates set by the BoC, the price of Oil, the country’s economic health, inflation, and the Trade Balance. The CAD is also impacted by market sentiment, particularly in relation to the US economy.
In conclusion, the USD/CAD pair’s movements are closely tied to economic data, interest rate decisions, and market sentiment. Traders and investors should keep a close eye on these factors to make informed decisions about their finances and investments.