USD/CAD attracts some sellers below 1.3500, eyes on US Retail Sales, BoC’s Macklem speech

The USD/CAD pair extends its downside below the 1.3500 mark during the early Asian session on Thursday. The decline of the US Dollar (USD) following the Federal Reserve (Fed) weighs on the pair. At press time, USD/CAD is trading at 1.3488, down 0.07% for the day.

The Fed held the fed funds target range steady at 5.25%–5.5% for a third consecutive meeting on Wednesday due to easing labour demand and slowing inflation readings over recent months. The interest rate projection showed the possibility of the Fed cutting before the middle of next year has increased. The Fed now anticipates three rate cuts next year rather than two. This, in turn, exerts some selling pressure on the USD and acts as a tailwind for the GBP/USD pair.

Apart from this, the US Core Producer Price Index (PPI) for November came in worse than market expectations, easing from 2.3% to 2.0% YoY. The headline PPI figure dropped 0.9% from a 1.2% rise in the previous reading.

On the other hand, a recovery in oil prices lends some to the commodity-linked Lonnie. That being said, the Organisation of the Petroleum Exporting Countries (OPEC) report raised its global growth economic forecasts, which eased concerns about the oil demand outlook in 2024.

Last week, the Bank of Canada (BoC) left its benchmark interest rate on hold at a 22-year high of 5.0%. Money markets anticipate the Canadian central bank to begin easing as soon as April and cut the rate to a total of 90 basis points (bos) in 2024. However, the BoC said it was premature to consider rate cuts.

On Thursday, the US weekly Jobless Claims and Retail Sales will be released. On Friday, the US S&P Global PMI data will be due, and BoC Governor Tiff Macklem is set to speak in the American session. These events could give a clear direction to the USD/CAD pair.