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The USD/CAD pair trades with mild gains near 1.3755 during the early Asian session on Friday. The US Dollar (USD) strengthens against the Canadian Dollar (CAD) after the upbeat US Gross Domestic Product (GDP) and weekly Initial Jobless Claims data. The Canadian GDP for the second quarter (Q2) and the US Personal Consumption Expenditures (PCE) Price Index report for July will be the highlights later on Friday. 

Data released by the US Bureau of Economic Analysis (BEA) on Thursday showed that the US GDP expanded at an annual rate of 3.3% in Q2. This figure came in stronger than the initial estimate of 3% and the expectation of 3.1%, respectively. Meanwhile, the number of US citizens submitting new applications for unemployment insurance for the week ending August 23 declined to 229K, compared to 234K (revised from 235K) in the previous week. This reading came in below the market consensus of 230K. 

The Greenback edges higher in an immediate reaction to the better-than-expected US economic data. However, traders remain cautious ahead of the release of US PCE inflation data, the Fed’s favored price gauge, later on Friday. According to CME's FedWatch tool, traders are now pricing in around an 85% chance of a quarter-point rate cut from the Federal Reserve (Fed) next month. 

Meanwhile, a rise in crude oil prices might support the commodity-linked Loonie and create a headwind for the pair. It’s worth noting that Canada is the largest oil exporter to the US, and higher crude oil prices tend to have a positive impact on the CAD value.

Canadian GDP is expected to contract at an annual rate of 0.6% in Q2, compared to an expansion of 2.2% in Q1. If the report shows a stronger-than-expected outcome, this could lift the CAD and help limit the pair’s losses in the near term. 

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