Ella 
The USD/CAD pair is trading weaker during early Asian trading on Thursday. The pair rebounded from four-month lows of 1.3310 to 1.3350. However, the U.S. dollar (USD) upside may be limited amid expectations of three interest rate cuts from the Federal Reserve (Fed). Investors are awaiting Canadian retail sales and U.S. GDP growth data on Thursday. These events could trigger volatility in currency pairs ahead of the holidays.
The Federal Reserve’s hawkish comments last week and the central bank’s signal that it will cut interest rates by a total of 75 basis points (bps) have created some selling pressure on the US dollar (USD). Federal Reserve Chairman Jerome Powell did not provide any guidance on a timetable for a rate cut, but markets expect a cut as early as March.
On Wednesday, the U.S. CB Consumer Confidence Index for December was 110.7, up from the previous reading of 101.0 (revised to 102.0), marking the largest increase since the beginning of 2021. Additionally, existing home sales climbed to an annual rate of 3.82 million units in November, better than market expectations of 3.77 million units.
In terms of the London dollar, the Bank of Canada (BOC) released the summary of discussions at the December 6 meeting. When the Board of Governors decided to put borrowing costs on hold at its December meeting, it agreed that interest rates were already high enough to tame inflation. However, risks to the inflation outlook remain high and the central bank has left the door open for another rate hike.
Traders will take more clues from Canadian retail sales for October, which are expected to rise 0.8% on a monthly basis from 0.6% in the previous month. Additionally, annualized U.S. third-quarter (Q3) gross domestic product will be released on Thursday. Growth is expected to hold steady at 5.2%.
