USD/CAD gathers strength around 1.3880 in Thursday’s Asian session.
Fed's Powell said US growth appears to be slowing.
The BoC has paused its streak of seven consecutive rate cuts, holding its rate at 2.75% at the April meeting.
The USD/CAD pair trades in positive territory near 1.3880 during the early Asian session on Thursday. However, the upside for the pad might be limited amid the escalating trade uncertainties. Traders brace for the developments surrounding US trade talks with trading partners.
Federal Reserve (Fed) Chair Jerome Powell said on Wednesday that trade tensions risk undermining the Fed’s employment and inflation targets. Powell further stated that US economic growth appears to be slowing, with consumer spending growing modestly, a rush of imports to avoid tariffs likely to weigh on estimates of Gross Domestic Product (GDP), and sentiment souring. Financial markets expect the US central bank to resume rate cuts in June and that by year-end the policy rate, currently in the 4.25%-4.50% range, will be a full percentage point lower.
Elsewhere, Retail Sales in the United States rose by 1.4% in March, followed by the 0.2% increase seen in February, according to the US Census Bureau on Wednesday. This figure came in better than the estimation of 1.3%. However, the stronger-than-expected data fails to boost the Greenback as traders wait to see if US President Donald Trump’s administration reaches new trading agreements with partners.
The Bank of Canada (BoC) held its benchmark rate at 2.75% at its April meeting on Wednesday, its first pause after seven consecutive cuts. The Canadian central bank said that the uncertainty around US tariffs made it impossible to issue regular economic forecasts. Investors see nearly 50% odds the BoC will return to easing at its next policy decision at the June meeting and expect two further reductions in total by year-end.
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