The USD/CAD pair trades on a weaker note near 1.3480 during the early Asian session on Thursday. The US Federal Reserve (Fed) Chair Jerome Powell signalled that the central bank is ready to ease its monetary policy this year, which weighed on the Greenback in the previous session. Investors await the preliminary US Q2 Gross Domestic Product (Q2) and the Fed’s Raphael Bostic speech on Thursday for fresh drivers.
Fed Chair Jerome Powell hinted at Jackson Hole last week that cutting the interest rates is finally on the horizon, saying that “the time has come for policy to adjust.” Markets are now pricing in around 25-35% for a 50 basis points (bps) Fed rate cut, with 100 bps of easing still seen by year-end. Market players will closely watch the US employment report, as any signs of weakness in the labor market could trigger a deeper rate cut by the Fed and continue to undermine the US Dollar (USD).
The usual weekly Initial Jobless Claims for the week ending August 24 are estimated to remain unchanged at 232K compared to the previous reading. The attention will shift to the US Nonfarm Payrolls for August next week, which might offer some hints about the size of the Fed rate cut.
On the CAD’s front, economists expect the Bank of Canada (BoC) to cut additional interest rates for a third consecutive meeting next week due to persistent economic weakness, rising unemployment, and cooling down inflation. This, in turn, might drag the Canadian Dollar (CAD) lower against the Greenback.
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