The latest data released by both countries, although still positive, is favorable for the US dollar, with the US dollar expanding its gains against the Canadian dollar. Federal Reserve Chairman Powell's statement in his speech that 'going higher for a longer period of time' continues to affect the market, which remains vigilant about further tightening, thus boosting the US dollar. The US dollar traded at 1.3675 against the Canadian dollar, rising 0.35% after hitting a daily low of 1.3631.

Despite stable business activity in Canada, the US dollar gained momentum against the Canadian dollar due to favorable initial jobless claims and market speculation that the Federal Reserve would raise interest rates. According to the US Department of Labor, as of the week ending September 2nd, the number of first-time applicants for unemployment benefits increased by 216000, lower than the expected 229000, indicating that the job market has not yet loosened. This has put pressure on the Federal Reserve, whose focus is to push inflation towards its target of 2%.

Although the Federal Reserve has begun to take a more cautious stance, market reactions suggest that the Federal Reserve may raise interest rates in the future. The Federal Reserve Watch Tool of CME shows that the money market has fully digested the expectation that the Federal Reserve will maintain interest rates unchanged in September, but the likelihood of a 25 basis point rate hike in November is 43.5%.

Although the yield of US treasury bond bonds remained unchanged, the US dollar/Canadian dollar reacted to the upward trend of the data. Meanwhile, the US dollar index (DXY), which measures the value of the US dollar against a basket of currencies, rose slightly by 0.18.

Another reason for the decline of the Canadian dollar is the pressure on crude oil prices, falling 0.31% to $87.27 per barrel. Recent data from Canada shows that after a contraction of 48.6% in July, business activity expanded in August. The data released on Thursday showed an Ivey PMI of 53.5, indicating that the economy is in an expanding state. Some sub indicators of PMI have improved, such as employment and supplier delivery. Although the latest Q2 Gross Domestic Product (GDP) report showed overall improvement, it contracted by 0.2%, weakening the possibility of the Bank of Canada raising interest rates and cooling the overall economy.

The US dollar has resumed its upward trend against the Canadian dollar, challenging the main resistance level of 1.3667, which reached a high on April 28th. A daily closing price higher than the latter will expose the figure of 1.3700, followed by a high of 1.3804 on March 24th. On the contrary, if the US dollar closes below 1.3667 against the Canadian dollar on Thursday, sellers may still hold hope for a lower price. If it breaks through 1.3667, it will expose the low point of 1.3622 on September 6th, and then dive to the low point of 1.3586 on September 4th.