USD/CAD treads waters towards 1.3600, focus on BoC policy decision
- USD/CAD trades higher around 1.3590 after data releases from both countries last week.
- Canadian disappointing GDP data may influence the upcoming BoC's policy decision.
- Saudi Arabia is expected to extend its oil output cut, supporting the Canadian Dollar.
USD/CAD trades higher around 1.3590, extending gains on the second day during the Asian session on Monday. The Canadian Dollar (CAD) is experiencing downward support against the US Dollar (USD), which is attributed to the data releases from the United States (US) and Canada.
As said, Canada’s Gross Domestic Product (GDP) unexpectedly contracted at the rate of 0.2% annually in the second quarter, against the expected growth of 1.2%. The growth figure was 2.6% in the first quarter. S&P Global Manufacturing PMI report for August showed a reduction, with a reading of 48, compared to the market expectations of 49.2 and from 49.6 prior.
The USD/CAD pair faced downward pressure due to data figures that fell below expectations. The Bank of Canada (BoC) is set to announce its monetary policy decision this Wednesday, and the disappointing GDP figure may impact the anticipated 25 basis point (bps) rate hike by the BoC.
However, the improved prices of US crude oil might have limited the gains of the Loonie pair. The Western Texas Intermediate (WTI) price rose to a new year-to-date (YTD) high of $85.57, following the expected supply cuts of 1 million barrels per day (bpd) by Saudi Arabia in October. Additionally, Russia agrees with the Organization of the Petroleum Exporting Countries (OPEC) and its allies on the decision.
On the other hand, the US Nonfarm Payrolls (Aug) report showed improvement in job creation. The data reported a 187K figure, higher than the expected reading of 170K. The data reported 157K figure in the month of July. ISM Manufacturing PMI rose to 47.6, from the previous reading of 46.4. The market consensus was 47.
The robust jobs and manufacturing data support the Greenback which gauges the performance of the US Dollar (USD) against the six other major currencies. Spot treads waters around 104.20 at the time of writing. However, market participants seek further indications from the US Federal Reserve (Fed) on the policy decision in the upcoming meeting.