The USD/CAD pair is trading around 1.3545 in the early Asian session on Wednesday after the US ISM Manufacturing PMI came in at 47.2 in August, missing the estimation. The Bank of Canada (BoC) is expected to cut rates at its September meeting later today.
In August, the US ISM Manufacturing PMI rose slightly from 46.8 to 47.2, but still below the market consensus of 47.5. This indicates a contraction in the US manufacturing sector, putting pressure on the Greenback.
Investors are cautious ahead of the US August Nonfarm Payrolls report on Friday, which could provide hints on the Federal Reserve’s interest rate decisions. The FedWatch tool shows a 62% chance of a 25 bps rate cut in September, with a 38% chance of a 50 bps reduction.
The BoC is expected to deliver a rate cut today due to easing inflationary pressure in the Canadian economy. The Canadian Dollar (CAD) is also facing pressure from declining crude oil prices, as Canada is a major oil exporter to the US.
Analysis:
The USD/CAD pair is trading lower due to weaker US manufacturing data and expectations of rate cuts by both the Fed and BoC. This could impact investor sentiment and currency valuations. Additionally, declining oil prices are putting pressure on the CAD, affecting Canada’s economy. Investors should monitor these factors closely to make informed decisions in the financial markets.