Ella 
USD/CAD traded lower during Friday’s Asian session, trading lower near 1.3860. However, USD/CAD held near the eight-month high of 1.3889 recorded on Thursday. The commodity-linked Canadian dollar (CAD) maintained modest gains on modest gains in crude oil prices as Canada is the largest exporter of crude oil to the United States.
At press time, West Texas Intermediate (WTI) crude oil prices were trading near $76.50 per barrel. Despite ongoing concerns about global oil demand, supply risks from rising geopolitical tensions in the Middle East could provide support for crude oil prices.
The downside for USD/CAD may be limited as rising risk aversion could lead USD/CAD higher. Recent manufacturing and labor market data have created a complex picture of a slowdown in the U.S. economy and heightened expectations for a rate cut by the Federal Reserve. CME Group’s FedWatch tool shows traders fully expect a quarter-point rate cut on September 18.
The U.S. ISM Manufacturing Purchasing Managers’ Index (PMI) fell to an eight-month low of 46.8 in July, compared with the previous reading of 48.5 and expectations of 48.8. U.S. jobless claims rose to 249,000 in the week ended July 26 from 235,000 the previous week, beating estimates of 236,000.
Traders are likely to keep a close eye on U.S. July non-farm payrolls and average hourly earnings data due later in the North American session to get a sense of the state of the U.S. labor market.
