USD/CAD trades stronger above 1.3700 on the modest rebound of US Dollar
The USD/CAD pair is trading near 1.3710 in early Asian session on Thursday, marking a slight uptick after a four-day decline. The US Dollar is seeing a modest recovery, but expectations of a Fed rate cut are weighing on its potential upside.
Weaker-than-expected US Retail Sales data for May has fueled speculation of a rate cut by the Fed, leading to lower Treasury yields and a potential drag on the Greenback. Fed officials are taking a data-dependent approach, with some hinting at gradual interest rate cuts as inflation eases.
Market focus will be on US economic data releases later in the day, including Initial Jobless Claims, Building Permits, Housing Starts, and the Philly Fed Manufacturing Index. Positive data could support the Greenback and limit downside for the USD/CAD pair.
On the other hand, the Bank of Canada expressed concerns about downside risks and a growing gap between the Canadian and US economies in its recent Summary of Deliberations. The BoC recently cut its policy rate for the first time in four years, with expectations of further rate cuts in the near future.
Overall, the USD/CAD pair is influenced by both US and Canadian economic factors, with investors closely monitoring central bank actions and economic indicators for further direction.