USD/CAD grapples to halt its recent gains, inches lower to near 1.3520

• USD/CAD receives upward support due to the improved Crude oil prices.
• WTI price receives upward support on PBoC MLF rate cut and lower US Crude stockpiles.
• Canada's MPR indicates that the BoC anticipates inflation reaching its 2.0% target by 2025.

USD/CAD makes an effort to not capitalize on the recent gains after the interest rate decision from the Bank of Canada (BoC) on Wednesday. Additionally, the positive S&P Global Purchasing Managers Index (PMI) data from the United States (US) might have contributed to reducing the probability of rate cuts by the Federal Reserve (Fed) in March, leading to an appreciation in the USD/CAD pair. However, the spot price hovers near 1.3520 during the Asian session on Thursday.

On Wednesday, the Bank of Canada (BoC) maintained its benchmark interest rate at 5.0%, marking the fourth consecutive instance of the central bank keeping rates steady. BoC Governor Tiff Macklem announced a shift in focus, moving from the question of whether interest rates are sufficiently high to when they can potentially be lowered. The Bank of Canada's Monetary Policy Report (MPR) indicates that the central bank anticipates inflation reaching its 2.0% target by 2025.

Moreover, the improved Crude oil prices may contribute support for the Canadian Dollar, which in turn, undermines the USD/CAD pair. The West Texas Intermediate (WTI) oil price is modestly advancing, hovering around $75.50 per barrel. Crude oil prices' resilience can be attributed to speculations surrounding the People’s Bank of China's reduction in the Medium-term Lending Facility (MLF) rate, coupled with a concurrent decline in US crude oil stockpiles.

Furthermore, the preliminary US Gross Domestic Product Annualized report is scheduled for release on Thursday, with anticipated figures pointing to a 2.0% reading in the fourth quarter, down from the previous 4.9% reading. Should the actual US GDP align with these market expectations, there could be an increased probability of the Federal Reserve implementing a policy rate reduction in the upcoming March meeting.

However, market sentiment, as indicated by the CME's FedWatch tool, indicates a decrease in bets on a March rate cut from the Fed, falling below 40%. This represents a significant decline from the approximately 80% probability recorded just a month ago.