USD/CAD posts modest gains near 1.3500, all eyes on US PCE data

• USD/CAD trades on a stronger note around 1.3490 in Friday's early Asian session. 
• The second estimate of US GDP for Q2 2024 came in better than expected, growing by 3.0% vs. 2.8% prior. 
• Higher crude oil prices might support the Loonie and cap the pair's upside.

The USD/CAD pair trades with mild gains near 1.3490 during the early Asian session on Friday. The stronger-than-expected US economic growth provides some support to the US Dollar (USD). The markets might turn cautious ahead of the key US economic data, which is due later in the day. 

Data released by the US Bureau of Economic Analysis (BEA) showed on Thursday that the US Gross Domestic Product Annualized for the second quarter (Q2) grew 3.0% in the second estimate from 2.8% in the initial estimate. This figure came in better than the expectation of 2.8%. 

Meanwhile, the weekly Initial Jobless Claims for the week ending August 24 declined from 233K to 231K, below the market consensus of 232K. The US Dollar gains ground above the key 101.00 barrier in immediate reaction to the upbeat US economic data. 

Federal Reserve Atlanta President Raphael Bostic, a leading FOMC hawk, said on Thursday that it might be "time to move" on rate cuts as inflation cools down further and the unemployment rate up more than he expected, but he wants to see confirmation from the monthly jobs report and two inflation reports due before the Fed September meeting. 

Investors will closely monitor the release of the US Personal Consumption Expenditure (PCE) Price Index for July for some hints about the US interest rate path. A softer-than-expected PCE reading could trigger the Federal Open Market Committee (FOMC) to start a rate-cutting cycle, which acts as a headwind for the Greenback. 

On the Loonie front, the rebound of crude oil prices might lift the commodity-linked Canadian Dollar (CAD) as Canada is the leading exporter of oil to the United States. However, economists anticipate the Bank of Canada (BoC) to cut additional interest rates for a third consecutive meeting next week due to persistent economic weakness, rising unemployment, and cooling down inflation. This, in turn, might drag the CAD lower against the USD.