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USD/CAD Ranges Around 1.3600 With Attention on US NFP and Canadian GDP
The USD/CAD trades in a tight range between 1.3570 and 1.3610. The Jackson Hole Symposium is digested by investors prior to the release of crucial US labour and economic data. All eyes are on the annual Gross Domestic Product of Canada and Nonfarm Payrolls of the United States.
During Tuesday's early Asian session, the USD/CAD pair is trading sideways around 1.3600. The US Dollar Index (DXY) is unable to find a clear trajectory and is fluctuating around 104.00. For fresh impetus, market participants await US economic data and Canadian growth figures. This week's most anticipated event will be Friday's Nonfarm Payroll report, which could cause market volatility.
After digesting the Jackson Hole Symposium, investors redirect their attention to US economic data. However, Chairman Jerome Powell left the door open for additional rate increases if necessary. Nonetheless, it would depend on incoming data. According to World Interest Rates Probabilities (WIRP), the probability of a 25 basis point (bps) rise in November increased to nearly 70% from a modest likelihood in September. The Federal Reserve Bank of Dallas reported on Monday that the Manufacturing Index for August rose to -17.2 from -20, exceeding the consensus estimate of -21.6.
As Canada is the largest exporter of crude oil to the United States, a decline in oil prices diminishes the Canadian Dollar. Nonetheless, the favourable development in China, the world's largest oil importer, could boost the Loonie against its competitors. Consequently, the Chinese government would reduce the 0.1% tax on stock trading to stimulate the capital market and boost investor confidence.
The Canadian Retail Sales for June increased 0.1% from the previous month, as reported last week. The result exceeded the prediction of zero percent. On Friday, market participants will look to Canada's annual Gross Domestic Product (GDP) for guidance. The weaker-than-anticipated growth rate would persuade the Bank of Canada (BoC) to keep interest rates at 5%.
In the coming weeks, speculators will closely monitor the second-quarter GDP reading for Canada. The growth rate is anticipated to increase by 1.2%. On Friday, market participants will monitor the US Nonfarm Payrolls report. In August, the market anticipated that the US economy would generate more than 170,000 employment. Traders will take cues from the USD/CAD pair to identify trading opportunities.
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