USD/CAD rebounds above 1.3700, investors await US GDP data

The USD/CAD pair extends its recovery around 1.3705 during the early Asian trading hours on Thursday. The weaker-than-expected Canada’s Retail Sales weigh on the Canadian Dollar (USD). Later on Thursday, investors will closely monitor the US preliminary Gross Domestic Product (GDP) Annualized, which is projected to grow 2.5% in Q1. 

Investors anticipate that the US Federal Reserve (Fed) will lower its Fed Funds Rate in September 2024, with a chance of nearly 70%, according to the CME FedWatch Tool. Last week, the Fed policymaker stated that the central bank’s current restrictive policy is appropriate and that the Fed wouldn’t cut rates until the end of the year. The higher-for-longer US rate narrative provides some support for the Greenback against the CAD. 

About the data, the US Census Bureau showed on Wednesday that Durable Goods Orders in the United States rose by 2.6% MoM in March from the previous reading of a 0.7% increase. Excluding transportation, Durable Goods Orders gained by 0.2% MoM, below the market consensus of 0.3%

On the Loonie front, the recent Canadian Retail Sales data has triggered speculation that the Bank of Canada (BoC) might cut interest rates at its next meeting in June. Retail Sales in Canada decreased 0.1% MoM in February, worse than the estimation of a 0.1% increase. Excluding autos, Retail Sales fell 0.3% MoM in the same period, compared to the forecast of 0.0%. Additionally, the decline in crude oil prices exerts some selling pressure on the commodity-linked Loonie, as Canada is the largest crude oil exporter to the United States (US).