USD/CAD trades strongly above the 1.3800 mark ahead of the US GDP data

• USD/CAD attracts some buyers above 1.3800 amid the firmer USD.
• Bank of Canada (BoC) held interest rates steady on Wednesday.
• The speech of Israel’s Prime Minister exerts pressure on the riskier asset like Loonie.
• Traders will monitor the US Q3 GDP data due later on Thursday.

The USD/CAD pair gains traction above the 1.3800 psychological round mark during the early Asian session on Thursday. The renewed US Dollar (USD) demand amid the risk-off sentiment lends some support to the pair. USD/CAD currently trades near 1.3813, up 0.13% on the day.

Following the Bank of Canada (BoC) policy meeting on Wednesday, Canada’s central bank decided to hold the interest rate unchanged at 5% for the second consecutive time. BoC Governor Tiff Macklem said that the decision to maintain the rate was because the central bank wanted to allow monetary policy time to cool the economy and relieve price pressure. Macklem further stated that he will continue to assess whether monetary policy is sufficiently restrictive while mentioning that they will monitor the impacts of core inflation due to an oil price spike.

On the other hand, the rising geopolitical tension in the Middle East remains weighing on riskier assets like the Loonie and lifting the USD. On Wednesday, Israel’s Prime Minister Benjamin Netanyahu said Israel is preparing a ground invasion of Gaza, but he wouldn’t provide any specifics on the timing or other details regarding the operation.

Apart from this, US economic data released this week suggests the US economy gains momentum. The US New Home Sales increased to 759,000 MoM in September, above the estimation of 680,000, according to data published by the US Census Bureau on Wednesday. Earlier this week, both Manufacturing PMI and Services came in better than expected. Manufacturing figures climbed to 50 and the Services PMI improved to 50.9. While the flash Composite PMI for October climbed to 51.0 from 50.2.

Market participants will keep an eye on the preliminary Q3 US Gross Domestic Product on Thursday, which is expected to grow 4.2%. The better-than-estimated results could boost the Greenback and act as a tailwind for the pair. Additionally, the weekly US Jobless Claims, and Durable Goods Orders will be released later in the day. These events could give a clear direction to the USD/CAD pair.