• USD/CAD gains some positive traction on Thursday, though the upside remains capped.
• The Fed’s projected three rate cuts in 2024 caps the upside for the USD and the major.
• An uptick in Oil prices underpins the Loonie and contributes to keeping a lid on the pair.

The USD/CAD pair attracts some buyers during the Asian session on Thursday and for now, seems to have snapped a three-day losing streak, albeit lacks follow-through. Spot prices remain below the 1.3600 mark as traders look to important macro data from the US and Canada for some meaningful impetus.

Thursday's economic docket highlights the release of the monthly Canadian GDP report, along with the final US Q4 GDP print. Apart from this, the usual Initial Weekly Jobless Claims, Pending Home Sales and the revised Michigan Consumer Sentiment Index might influence the US Dollar (USD), which might produce short-term trading opportunities around the USD/CAD pair. The focus, however, remains glued to the US Personal Consumption Expenditures (PCE) Price Index on Friday.

In the meantime, the overnight hawkish remarks by Federal Reserve (Fed) Governor Christopher Waller cooled rate cut hopes and pushed the USD back closer to the monthly peak, lending some support to the USD/CAD pair. The Fed, however, projected a less restrictive policy going forward and indicated that it remains on track to cut interest rates by 75 basis points in 2024. This is holding back the USD bulls from placing aggressive bets and acting as a headwind for the currency pair.

Meanwhile, Crude Oil prices gain some follow-through traction in the wake of worries about tighter global supply amid lower Russian production. Furthermore, the Israel-Hamas conflict has shown little signs of de-escalation, which continues to fuel concerns about supply disruptions from the Middle East and lends additional support to the black liquid. This, in turn, is seen underpinning the commodity-linked Loonie and contributing to capping the upside for the USD/CAD pair.