USD/CAD snaps the three-day losing streak above 1.3700 on modest US Dollar recovery

• USD/CAD recovers to 1.3730 amid the firmer US Dollar in Thursday’s early Asian session. 
• The FOMC held rate steady for the seventh time in a row at its June meeting on Wednesday. 
• BoC’s Macklem said there is a limit to how far BoC can diverge on rates from Fed, but the’re not close to that. 

The USD/CAD pair snaps the three-day losing streak near 1.3730 during the early Asian trading hours on Thursday. The renewed US Dollar (USD) demand after the hawkish hold from the US Federal Reserve (Fed) provides some support to the pair. Investors will watch the US weekly Initial Jobless Claims, Producer Prices Index (PPI), and Fed’s John Williams speech, which are due later on Thursday. 

The Federal Open Market Committee (FOMC) left its benchmark lending rate in a range of 5.25%–5.50% for the seventh time in a row at its June meeting on Wednesday, as widely expected by market players. During the press conference, Fed Chair Jerome Powell noted that the restrictive stance on monetary policy is having the effect on inflation that the Fed had hoped to see, but the central bank will wait to see sufficient progress about inflation. Additionally, FOMC policymakers expect just one rate cut this year, down from three in March, according to its most recent economic predictions.

About the data, the US Consumer Price Index (CPI) rose 3.3% YoY in May, compared to the previous reading and the expectations of 3.4%. The core CPI, excluding volatile food and energy prices, increased 3.4% YoY in May, compared to a 3.6% rise in April and the estimation of 3.5%

On the Loonie front, the Bank of Canada (BoC) Governor Tiff Macklem said late Wednesday that there is a limit to how far the Canadian central bank can diverge on rates from the Federal Reserve (Fed), but they’re not close to that limit. The BoC lowered its benchmark rate by 25 basis points (bps) to 4.75% last week. The markets have priced in nearly 150 bps of additional cuts over the next couple of years. The divergence of interest rates between Canada and the US might boost the Greenback against the Canadian Dollar (USD) and support the pair in the near term.