USD/CAD remains depressed near 1.3600 ahead of US PMI, Jobless Claims data

The US Dollar remains weighed near lows on risk-on markets.
Investors are celebrating an imminent trade deal with the E,U which would bring more clarity to the global trade outlook.
Later today, US PMIs and Jobless Claims, and Canada’s Retail Sales will provide further fundamental guidance.

The US Dollar is ticking higher against the Canadian Dollar on Thursday and has risen above 1.3600, although it remains close to one-year lows at the 1.3540 area, driven by risk-on markets, following the release of US preliminary PMIs and weekly Jobless Claims data.

News of advances in a EU-US trade deal, which would include 15% tariffs and exemptions for automobiles, medical equipment, and alcohol, has boosted the market mood in Asia and Europe, keeping the safe-haven US Dollar on the defensive.

This news follows a trade deal with Japan and another with the Philippines and Indonesia on Wednesday, and US Treasury Secretary Bessent has announced a new round of talks with China for next week. Hopes that the worst of trade tariffs can be averted are boosting investors’ appetite for risk.

US PMIs and Jobless Claims data in the spotlight

In the calendar today, US preliminary PMIs are expected to show that business economic activity in both the services and manufacturing sectors expanded in July, highlighting a strong economic momentum, yet with Jobless Claims increasing.

Later today, President Trump is expected to visit the Federal Reserve amid a fierce campaign against Chairman Powell and only a few days ahead of July’s meeting. It is unclear whether the President will meet Powell, but there is the feeling that he will be increasing pressure on the bank to cut rates further.

In Canada, the focus will be on May’s Retail Sales figures, which are expected to have contracted, with the core reading, excluding automobiles, is falling for the third consecutive month. These numbers hint at further BoC monetary easing, and are unlikely to provide any significant support to the Loonie.

Economic Indicator

S&P Global Manufacturing PMI

The S&P Global Manufacturing Purchasing Managers Index (PMI), released on a monthly basis, is a leading indicator gauging business activity in the US manufacturing sector. The data is derived from surveys of senior executives at private-sector companies from the manufacturing sector. Survey responses reflect the change, if any, in the current month compared to the previous month and can anticipate changing trends in official data series such as Gross Domestic Product (GDP), industrial production, employment and inflation. A reading above 50 indicates that the manufacturing economy is generally expanding, a bullish sign for the US Dollar (USD). Meanwhile, a reading below 50 signals that activity in the manufacturing sector is generally declining, which is seen as bearish for USD.

Economic Indicator

S&P Global Services PMI

The S&P Global Services Purchasing Managers Index (PMI), released on a monthly basis, is a leading indicator gauging business activity in the US services sector. As the services sector dominates a large part of the economy, the Services PMI is an important indicator gauging the state of overall economic conditions. The data is derived from surveys of senior executives at private-sector companies from the services sector. Survey responses reflect the change, if any, in the current month compared to the previous month and can anticipate changing trends in official data series such as Gross Domestic Product (GDP), industrial production, employment and inflation. A reading above 50 indicates that the services economy is generally expanding, a bullish sign for the US Dollar (USD). Meanwhile, a reading below 50 signals that activity among service providers is generally declining, which is seen as bearish for USD.

Economic Indicator

Retail Sales ex Autos (MoM)

The Retail Sales ex Auto data, released by Statistics Canada on a monthly basis, measures the total value of goods sold by retailers in Canada excluding the key sector of motor vehicles and parts. Changes in Retail Sales are widely followed as an indicator of consumer spending. Percent changes reflect the rate of changes in such sales, with the MoM reading comparing sales values in the reference month with the previous month. Generally, a high reading is seen as bullish for the Canadian Dollar (CAD), while a low reading is seen as bearish.