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Focus on BoC Policy Decision as USD/CAD Approaches 1.36
After data releases from both countries last week, USD/CAD trades higher near 1.3590. The forthcoming policy decision of the Bank of Canada may be affected by Canada's disappointing GDP data. It is anticipated that Saudi Arabia will prolong its oil output cut, boosting the Canadian Dollar.
USD/CAD trades higher around 1.3590, extending gains for a second consecutive day during Monday's Asian session. The data releases from the United States (US) and Canada are providing support for the Canadian Dollar (CAD) against the United States Dollar (USD).
As stated, Canada's Gross Domestic Product (GDP) unexpectedly contracted by 0.2% annually in the second quarter, as opposed to the 1.2% growth that was anticipated. The growth rate for the first quarter was 2.6%. The August S&P Global Manufacturing PMI report showed a decrease, with a reading of 48, compared to market expectations of 49.2 and the previous reading of 49.6.
The USD/CAD pair was subject to downward pressure as a result of below-predicted data figures. The Bank of Canada (BoC) is scheduled to announce its monetary policy decision on Wednesday, and the disappointing GDP figure may have an impact on the expected 25 basis point (bps) rate rise.
However, the increase in US crude oil prices may have limited the Loonie's gains. Following the expected supply reduction of 1 million barrels per day (bpd) by Saudi Arabia in October, the price of Western Texas Intermediate (WTI) crude oil reached a new yearly high of $85.57. Russia concurs with the Organisation of the Petroleum Exporting Countries (OPEC) and its allies regarding the decision.
In contrast, the US Nonfarm Payrolls (August) report revealed an increase in job creation. The data reported a value of 187K, which was greater than the predicted value of 170K. July data indicated a figure of 157K individuals. ISM Manufacturing PMI increased to 47.6 from 46.4 previously. The consensus of the market was 47.
The resilient employment and manufacturing data bolster the Greenback, which measures the performance of the US Dollar (USD) against the other six major currencies. Spot is trading around 104.20 at the time of this writing. Nonetheless, market participants anticipate additional information from the US Federal Reserve (Fed) regarding the policy decision at the upcoming meeting.
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