Photo by Michelle Spollen on Unsplash
 

• USD/CAD trades with mild gains around 1.3830 in Thursday’s early Asian session. 
• Fed kept its key benchmark rate unchanged at the July policy meeting. 
• The Bank of Canada holds the interest rate at 2.75%, as widely expected.

The USD/CAD pair posts modest gains near 1.3830 during the Asian trading hours on Thursday. The US Dollar (USD) edges higher against the Canadian Dollar (CAD) after the Federal Reserve (Fed) left US interest rates unchanged and signaled the US central bank isn’t ready to cut rates. 

The Fed decided to hold its benchmark federal funds rate in a range of 4.25%-4.5% at its July meeting on Wednesday, as widely expected. Fed Chair Jerome Powell stated after the policy meeting that the US central bank has “made no decisions” about a potential policy change in September, and it may take a bit to assess the effect of tariffs on consumer prices.

Additionally, stronger-than-expected US economic data contribute to the Greenback’s upside. Data released by the US Bureau of Economic Analysis on Wednesday showed that the US Gross Domestic Product (GDP) expanded at an annual rate of 3.0% for the April through June period. This figure followed the 0.5% contraction in the first quarter and came in stronger than the expectation of 2.4%. 

On the Loonie front, the Bank of Canada (BoC) left its interest rate unchanged at 2.75% on Wednesday, citing resilience in the economy despite the ongoing global trade war brought on by the US. BoC Governor Tiff Macklem delivered dovish comments, saying that the door is still open to lowering rates in the future if necessary. This might weigh on the CAD and create a tailwind for the pair in the near term. 

The attention will shift to the US employment report for July, which will be released later on Friday. The US economy is expected to add 110K jobs in July, while the Unemployment Rate is projected to rise to 4.2% from 4.1% during the same period. The better-than-expected Nonfarm Payrolls (NFP) print could lift the Greenback. 

More By This Author: