USD/CAD drops below the 1.3500 mark, eyes on Canadian GDP, US NFP

• USD/CAD attracts some sellers for the fifth consecutive day during Friday’s Asian session.
• Initial Jobless Claims came in lower than expected; US PCE inflation matched expectations.
• A rise in oil prices boosts the Canadian Dollar against the USD.
• Market players will monitor the Canadian Gross Domestic Product (GDP), US Nonfarm Payrolls for fresh impetus.

The USD/CAD pair loses traction and breaks below the 1.3500 area during the early Asian session on Friday. Market players await the highly-anticipated US Nonfarm Payrolls and Canadian Gross Domestic Product (GDP) for the second quarter. The annual growth number is expected to grow 1.2% from the previous reading and the US economy is expected to create 170K jobs in August. The pair currently trades around 1.3495, losing 0.10% on the day.

Fed Chairman Jerome Powell stated at the Jackson Hole Symposium last week that a potential additional rate hike would be depending on incoming data. However, the mixed economic data from the US on Thursday might challenge the Fed to keep rates higher for longer.

On Thursday, US Initial Claims for the week ending of August 25 fell to 228K, falling short of the market consensus of 232 K. The figure marked the lowest level in four weeks while Continuing Claims reached their highest level in six weeks. Additionally, the Federal Reserve's preferred gauge of inflation, the US Core Personal Consumption Expenditure (PCE) Price Index improved to 4.2% in July from 4.1% in the previous and line with expectations. In response to the data, the Greenback weakened against the Loonie.

On the Loonie front, Statistics Canada reported on Thursday that the nation’s Current Account for the second quarter (Q2) deficit narrowed to C$ 6.63 billion from C$3.17 billion deficit in the previous quarter. Meanwhile, a rise in oil price lifts the Canadian Dollar against its rivals as Canada is the largest exporter of crude to the US.

Market participants will keep an eye on the Canadian Gross Domestic Product (GDP) for the second quarter due later in the day. On the US docket, the US Nonfarm Payrolls will be the closely watched event. The US economy is expected to create 170K jobs in August. Also, the Unemployment Rate and ISM Manufacturing PMI will be released later on Friday. These figures could give a clear direction for the USD/CAD pair.