USD/CAD loses traction above the 1.3200 mark, US GDP eyed

• USD/CAD loses momentum following the Federal Reserve (Fed) meeting.
• The Fed hiked its rate by 25 basis points (bps) to a target range of 5.25%–5.5%.
• Market players anticipated that the BoC will likely not see the need to raise rates further this year.
• Investors await preliminary Q2 US GDP growth.

The USD/CAD pair struggles to gain and loses momentum above the 1.3200 mark during the early Asian session on Thursday. The major pair currently trades around 1.3204, down 0.03% for the day. The US Dollar is weakening following the Federal Open Market Committee (FOMC) meeting.

The Federal Open Market Committee (FOMC) hiked its interest rate by a quarter percentage point to a target range of 5.25%–5.5%, a move markets had fully priced in. This is the 11th rate hike since the FOMC began tightening policy in March 2022.

Following the rate decision, Fed Chairman Jerome Powell stated that the FOMC will assess the totality of incoming data, along with its implications for economic activity and inflation. He added that it's possible to raise the fed funds rate again at the September meeting if the data warrants it.

The data released earlier this week revealed that the Conference Board's Consumer Confidence Index rose to 117 in July from 110.1 (revised from 109) in June. On the same line, the House Price Index for May YoY came in at 2.8%, above expectations of 2.6% but below the prior month's data. Investors will digest the data from the Fed meeting and take cues from the upcoming economic data later in the week.

On the Canadian Dollar front, the Bank of Canada (BoC) increased interest rates by 25 basis points (bps) to a 22-year high of 5.0% on July 12. The central bank has hiked rates ten times since March 2022. Despite this, market players anticipated that the BoC would likely not see the need to raise rates further this year.

According to a survey of market participants released by the central bank on Monday, a median of the participants anticipate the bank to maintain interest rates at a 22-year high of 5.00% until the end of 2023 before cutting the rates in March.

In the meantime, the Canadian Dollar might attract some follow-through buying amid upbeat oil prices. It’s worth noting that Canada is the leading oil exporter to the United States, and higher crude prices strengthen the Canadian Dollar.

Looking ahead, market participants will focus on the release of US Advanced Gross Domestic Product (GDP) QoQ, core Personal Consumption Expenditure (PCE) Price Index MoM, Durable Goods Orders, and Initial Jobless Claims data later in the day. Also, the Canadian Gross Domestic Product for May MoM will be due on Friday. These data could give the USD/CAD pair a clear direction.