During the early Asian trading hours on Thursday, the USD/CAD pair continued to recover around the 1.3705 level. The Canadian dollar was negatively impacted by below-expected Canadian retail sales reports. Later that day, investors will be awaiting annual US GDP data, which is expected to grow by 2.5% in the first quarter.

For their part, investors expect the Fed to cut the federal funds rate in September 2024, with the CME FedWatch tool indicating a probability of about 70%. Last week, the Federal Reserve's policymaker confirmed that the current restrictive policy is appropriate, and the bank does not intend to cut interest rates until the end of the current year. This interpretation provides some support for the USD/CAD, given its narrative of the highest long-term US interest rates.

Regarding the data, the US Census Bureau showed on Wednesday that orders for durable goods in the United States rose by 2.6% on a monthly basis in March from the previous reading of 0.7%. Excluding transportation, durable goods orders rose 0.2% month-on-month, below market expectations of 0.3%.

On the Canadian dollar front, recent Canadian retail sales data has sparked speculation that the Bank of Canada (BoC) may cut interest rates at its next meeting in June. Retail sales in Canada fell 0.1% month over month in February, worse than estimates of a 0.1% rise. Excluding automobiles, retail sales fell 0.3% month over month in the same period, compared to expectations of 0.0%. In addition, lower crude oil prices are putting some selling pressure on the commodity-linked Canadian dollar, as Canada is the largest exporter of crude oil to the United States.