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Keeping this in consideration, why do dogs circle before they go to the bathroom?
A dog makes circles before he poops for his hygiene. If a dog was ever in a grassy field, he would circle to make sure all the other dogs knew where his prized message lay. This also helps in marking his territory. Another reason Fido might spin around a few times is to check the area for threats, like predators.
Similarly, why do dogs sniff around before they pee?
Dogs leave their scents in the urine deposits that they leave on pavements, kerbs, trees and lampposts. By sniffing these, your dog is gaining information on who is in their neighbourhood; the gender of the dog, its reproductive status, general status in life and exactly when it passed by.
Scent marking is an instinctual behavior in which a dog deposits his own odor — in the form of urine or feces — onto his environment to mark territory or make a statement. Other dogs who come upon the scent can discern a lot about fellow canines in the neighborhood.