USD/CAD retraced its recent losses, trading around 1.3510 during the Asian session on Thursday. The US Dollar (USD) remains firm as traders exercise caution ahead of key economic data, including the US ISM Services PMI and Initial Jobless Claims, set for release later in the North American session.
Focus will shift to Friday’s US Nonfarm Payrolls (NFP) report, which is anticipated to provide further insight into the potential magnitude of a Federal Reserve (Fed) rate cut this month.
The US Dollar Index (DXY), which tracks the USD against six major currencies, is trading around 101.30. The Greenback is bolstered by rising 2-year and 10-year US Treasury yields, currently at 3.76% and 3.75%, respectively.
Despite this, the US Dollar faced headwinds following the release of July’s US JOLTS Job Openings data, which fell short of expectations and pointed to a slowdown in the labor market. Job openings decreased to 7.673 million in July from 7.910 million in June, marking the lowest level since January 2021 and missing the forecast of 8.10 million.
On Wednesday, the Bank of Canada (BoC) reduced its benchmark interest rate by 25 basis points (bps) to 4.25%, in line with expectations from the September meeting. BoC Governor Tiff Macklem stated, “If inflation continues to ease broadly in line with our July forecast, further cuts to our policy rate are likely.” He also noted that the 25 bps reduction was deemed appropriate and observed that the divergence between Canadian and US interest rates has not significantly impacted the exchange rate.
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