• USD/CAD edges lower after pulling back from an eight-month high of 1.3849 level.
• The pair’s downside could be restrained as stronger US economic data have reduced the Fed’s rate cut odds for September.
• The Canadian Dollar may struggle as the BoC is expected to continue easing policy in 2024.

USD/CAD breaks its winning streak that began on July 17, trading around 1.3810 during the Asian session on Friday. The pair retreated from an eight-month high of 1.3849, a level recorded on Thursday. This downside of the USD/CAD pair is attributed to the weakening of the US Dollar (USD) ahead of the release of the US Personal Consumption Expenditures (PCE) Price Index for June.

However, the US Dollar may limit its downside as stronger US economic data have reduced some rate cut expectations for September. On Thursday, the US Gross Domestic Product (GDP) for the second quarter (Q2) was stronger than expected. This follows Wednesday’s US PMI data, which indicated a faster expansion in private-sector activity for July, highlighting the resilience of US growth despite elevated interest rates.

The US GDP grew at an annualized rate of 2.8%, adjusted for seasonality and inflation, up from the previous reading of 1.4% and surpassing forecasts of 2%. Additionally, the Composite PMI rose to 55.0 from the previous 54.8 reading, marking the highest reading since April 2022 and indicating sustained growth over the past 18 months.