USD/CAD remains under pressure around 1.3350, focus on Canadian Retail Sales and US GDP data

• USD/CAD edges lower to 1.3351 amid the ongoing sell-off in USD.
• The annual rate of US Existing Home Sales arrived at 3.82M in November, better than expected.
• BoC Governing Council agreed that rates were high enough to curb inflation, but the risks to the inflation outlook remained high.
• Investors will focus on Canadian Retail Sales and US GDP Annualized for Q3.

The USD/CAD pair trades on a softer note during the early Asian session on Thursday. The pair bounces off the four-month lows of 1.3310 and rebounds to 1.3350. However, the upside of the US Dollar (USD) might be limited due to the anticipation of the three rate cuts from the Federal Reserve (Fed). Investors await the Canadian Retail Sales and US GDP growth numbers on Thursday. These events could trigger volatility in the currency pair ahead of the holiday.

The hawkish remarks from the Fed last week and the signal that the central bank will cut interest rates by a total of 75 basis points (bps) have exerted some selling pressure on the US Dollar (USD) broadly. The Fed Chair Jerome Powell didn’t provide any guidance on the timeline of rate cuts, but the markets are expecting a cut as early as March.

On Wednesday, US CB Consumer Confidence for December grew by the most since early 2021, rising to 110.7 versus 101.0 prior (revised down from 102.0). Furthermore, the annual rate of Existing Home Sales climbed to 3.82M in November, better than the market expectation of 3.77M.

On the Loonie front, the Bank of Canada (BoC) revealed the Summary of Deliberations of the December 6 meeting. The Governing Council agreed that interest rates were high enough to curb inflation when they decided to leave borrowing costs on hold at its December meeting. However, the risks to the inflation outlook remained high, and central bank opened the door for another rate hike.

Traders will take more cues from the Canadian Retail Sales for October, which is estimated to show an increase of 0.8% MoM from 0.6% in the previous reading. Also, the US Gross Domestic Product Annualized for the third quarter (Q3) will be due on Thursday. The growth rate is projected to remain steady at 5.2%.