The USDCAD pair is consolidating and currently trading at 1.2554 ahead of the highly anticipated US Nonfarm Payrolls.
Even before Fed Chair Jerome Powell’s notes last Friday at Jackson Hole, the US dollar has lost almost 1.4%. But it is still up around 3% for the year. The greenback extended its recent fall as third-quarter GDP estimates were dropped and amid high risk outlook.
In Canada, the start of the week’s Canadian second-quarter GDP data came as a negative surprise to investors. Though, the Canadian Dollar has been supported in a relatively strong commodities complex this week owing to US dollar weakness.
As an example, US crude recovered as the market grappled with the ongoing impact of Hurricane Ida on US crude production in the Gulf. Almost 94% of Gulf production remains shut and IHS Markit reported that most refineries that were hit by Ida escaped major damage but will not be fully back online for three weeks.
Looking forward, analysts at Westpac expect a NFP gain of 850k for August (market median estimate is 725k), as strong demand for labor persists. ‘The August ISM non-manufacturing index should show underlying demand remaining strong, despite services being at risk from delta (market f/c: 61.8),” the analysts also said.
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