USD/CAD peaks, then stabilizes after US economic data

The USD/CAD pair peaked at 1.3377’s daily high, then consolidated at 1.3355. Further oil production cuts by Saudi prospects lifted crude prices, favouring the Canadian dollar.

On Thursday’s session, the USD/CAD reversed as the US counterpart lost traction following weak mid-tier economic data. The pair rose to nearly 1.3380 and then settled at 1.3355, while the CAD also benefited from rising Oil prices.

In July, the US Services sector displayed some weakness on the data front but stayed resilient. The S&P index came in at 52.3, lower than the consensus and previous figures of 52.4, while the Institute for Supply Management (ISM) came in at 52.7, failing to live up to the expected 53 and the last 53.9.

Labour market data indicated a slight increase in Jobless Claims to 227,000 at the end of July, as anticipated. However, Unit Labor Costs from Q2 rose by 1.6%, falling short of the expected 2.6% and the previous 3.3%. On Friday, Nonfarm Payrolls (NFPs) will offer investors a clearer outlook on the sector, along with wage inflation and unemployment figures. Overall, data on Thursday showed that the US Services sector remains resilient, but the labour market signals are mixed so NFP data will be closely watched.

On the Canadian front, no relevant data will be released by Canada for the rest of the week. Rising Oil prices are giving traction to the Canadian currency, as the West Texas Intermediate (WTI) barrel rose more than 2% to $81.68 on the back of expectations of production cuts by Saudi Arabia in September.