Ella 
USD/CAD traded higher around 1.3642 on the back of demand for the greenback.
The Bank of Canada kept its key overnight interest rate at 5%, as expected.
The U.S. ISM Services Purchasing Managers’ Index rose to 54.5 in August from 52.7 in the previous month, which was better than expected.
Investors will focus on the number of Americans filing initial jobless claims last week and Canadian labor force data.
In early Asian trading on Thursday, USD/CAD gained momentum below the mid-1.3600 level. At the same time, the U.S. dollar index hovered around 104.85, retreating from 105.00 after the release of the U.S. ISM Services Purchasing Managers Index. USD/CAD is currently trading around 1.3642, up 0.04% on the day.
The Bank of Canada kept its key overnight interest rate unchanged at 5% on Wednesday, as expected. The Bank of Canada’s Board of Governors said it left the door open to another interest rate hike as core inflation measures remain elevated. Bank of Canada policymakers added that the economy has entered a period of slowing expansion, which is needed to ease inflationary pressures.
In terms of economic data last week, Canada’s second-quarter GDP annualized quarterly rate recorded -0.2%, compared with the previous value of 2.6%. The growth figure was worse than expected, at 1.2%. Meanwhile, a rebound in oil prices could boost the Canadian dollar as Canada is the largest exporter of crude oil to the United States.
On the other hand, the dollar rose on cautious market sentiment as investors awaited Chinese trade data. At the same time, the market expects the Federal Reserve (Fed) to keep interest rates above 5% for longer. Federal Reserve (FED) Governor Christopher Waller (Christopher Waller) said that the Fed still has room to raise interest rates further, but the data will determine whether the Fed needs to raise interest rates again and whether it has completed raising interest rates.
According to data released by the Institute for Supply Management (ISM) on Wednesday, the U.S. ISM Services Purchasing Managers Index rose to 54.5 in August from 52.7 previously, higher than the expected value of 52.5. The number is the highest since February. In addition, the final value of the S&P Global Composite Index fell to 50.2 in August from 50.4 in July.
Looking ahead, the U.S. will release weekly initial jobless claims, quarterly non-farm productivity data and second-quarter (Q2) unit labor costs. In Canada, labor market data for August will be closely watched. The unemployment rate is expected to rise 5.6%. These data will provide direction for the USD/CAD currency pair.
