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The USD/CAD pair trades with mild gains near 1.3740, snapping the five-day losing streak during the early Asian session on Friday. The uptick of the pair is supported by the firmer US Dollar (USD) after the upbeat Initial Jobless Claims.
Initial claims for unemployment insurance came in less than expected last week, easing some fears about the US labor market. Data released by the Department of Labor showed on Thursday that the initial jobless claims for the week ending August 3 increased by 233,000, compared to 250,000 in the previous week (revised from 249,000), below the consensus of 240K. The upbeat reading provides some support to the Greenback against the Loonie.
The markets remain expecting a strong probability of a half percentage point reduction for the first move and a full percentage point cut by the end of the year. According to the CME FedWatch Tool, traders have priced in 57.5% odds that the Federal Reserve (Fed) will cut 50 basis points (bps) at the September meeting, down from 83% earlier this week. A deeper Fed rate cut expectation is likely to limit the pair’s upside in the near term. On the CAD’s front, the Bank of Canada (BoC) decided to cut interest rates at its July meeting to 4.5%, hinting at further easing of monetary policy where appropriate. BMO and CIBC analysts forecast a further rate reduction of 75 bps in 2024, or a quarter-point cut at each remaining meeting this year. However, traders will take more cues from the key Canadian employment report, which is due later on Friday. The Canadian economy is projected to add 22.5K jobs in July, while the Unemployment Rate is forecast to rise to 6.5% in July from 6.4% in June. More By This Author:USD/CHF Attracts Some Sellers Below 0.8600 As Geopolitical Risks Draw Investors To Safe-Haven Swiss Franc USD/JPY Hovers Around 146.00 After BoJ Summary Of Opinions AUD/USD Attracts Some Buyers Near 0.6550 Amid RBA’s Hawkish Stance, Bigger Fed Rate Cut Bets
