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The USD/CAD pair trades softer around 1.3605 during the early Asian session on Friday. However, the cautious mode in the market might lift the US Dollar (USD) ahead of the key event. The US Federal Reserve (Fed) Chair Jerome Powell’s speech at the Jackson Hole Symposium will take centre stage on Friday.
Data released by S&P Global on Thursday showed that the US Composite Purchasing Managers Index (PMI) fell slightly to 54.1 in August’s flash estimate, its lowest level in four months, from 54.3 in July. This figure came in better than the expectation of 53.5. Meanwhile, Manufacturing PMI dropped to 48 in the same period from 49.6, while the Services PMI rose to 55.2 from 55. The Greenback edges higher in an immediate reaction to the encouraging US PMI data.
The July FOMC Minutes released on Wednesday showed that the “vast majority” of FOMC participants supported the case to lower the interest rate at the upcoming September meeting if data met expectations. Investors have priced in a 100 basis points (bps) of a Fed total rate cut by year-end, but those odds will likely change after Powell’s speech. Any additional dovish comments from Fed officials might continue to undermine the USD against the Loonie.
On the Loonie front, the recent Canadian July inflation data has triggered the bets that the Bank of Canada (BoC) would set for its third interest rate cut in a row come September. Money markets are now expecting rate cuts of 25 bps for the remaining monetary meetings of the year. This, in turn, might weigh on the Canadian Dollar (CAD) and help limit USD/CAD’s losses. More By This Author:WTI Holds Below $72.00 As Wider Middle East Conflict Fade XAU/USD Flat Lines Above $2,500 Amid Weaker US Dollar, Fed Rate Cut Expectations USD/CHF Holds Below 0.8650 Amid Broad US Dollar Weakness
