USD/CAD retreats from highs, approaching 1.3800 ahead of the US GDP release

• The US Dollar is giving away gains as the enthusiasm for the tariff ban wanes.
• - Investors are growing cautious with all eyes on the US GDP and Jobless Claims figures.
• - The rising Oil prices, on hopes of some trade normalisation, have buoyed the CAD.

The US Dollar has given away all the ground taken after the court ruling against US trade tariffs, and is trading with moderate losses ahead of the US Session opening, as the Canadian Dollar draws support from the rebound in Oil prices.

A US federal court ruled on Wednesday that the US Congress has the exclusive authority to regulate international trade, and ordered the US administration to reverse all tariffs imposed after the April 2 "Liberation Day".

The market reacted with a relief rally that sent the US Dollar to ten-day highs above the 100.00 psychological level. Likewise, investors dialled back expectations of Fed rate cuts to 42 basis points this year, from 50 bps. earlier this week.

The USD loses ground as the dust from the tariff ban settles

The USD, however, has lost momentum during the European trading session, with investors digesting the news and focusing on the US GDP figures, which are expected to confirm a 0.3% contraction in the first quarter. This is allowing some CAD recovery.

Hopes of some normalisation on global trade boosted expectations of an increase in Oil demand, and sent fears of an OPEC+ supply hike to the backseat. The US benchmark WTI oil extended its recovery from week lows right above $60.00 to $63.00, which provided some support to the Canadian Dollar.

In Canada, the focus is on Friday's GDP figures, which are expected to show that the economy grew at a 0.1% pace in Q1. These figures are unlikely to alter hopes that the CAD might cut rates again next week, as the labour market shows signs of deterioration.