Anna 
London – In the London session on Thursday, the USD/CAD pair edged lower to around 1.3450, influenced by an optimistic outlook for risk-oriented assets. The Canadian Dollar weakened against the US Dollar as the latter faced a significant sell-off, despite reduced expectations for rate cuts by the Federal Reserve (Fed) before its June monetary policy meeting.
The upbeat market sentiment is reflected in the stellar gains of S&P500 futures during the European session. Concurrently, the US Dollar Index, measuring the Greenback against six major currencies, hit a two-week low near 103.70. Additionally, the 10-year US Treasury yields dropped to 4.31%.
Despite the Federal Open Market Committee (FOMC) minutes for the January policy meeting signaling a reluctance to reduce interest rates too soon, the US Dollar struggled to recover. Most Fed policymakers remain unconvinced that inflation will consistently return to the 2% target.
Investors are currently awaiting the preliminary S&P Global PMI data for February, scheduled for release at 14:45 GMT. Forecasts indicate a slight decrease in the Manufacturing PMI to 50.5 from January’s 50.7. The Services PMI, representing the service sector, is anticipated to be at 52.0, down from the previous reading of 52.5.
Looking ahead, attention is on the Canadian Dollar with the release of Retail Sales data for December at 13:30 GMT. Expectations are for a 0.8% monthly rise in Retail Sales following a 0.2% contraction in November. Retail Sales excluding autos are projected to have increased by 0.7% compared to a 0.5% decline previously. Positive Retail Sales data would likely postpone expectations of rate cuts by the Bank of Canada (BoC).
