USD/CAD holds losses below 1.3900 ahead of US Q2 GDP Annualized

• USD/CAD depreciates as the US Dollar weakens ahead of Q2 GDP Annualized data.
• San Francisco Fed's Daly said more rate cuts may be needed to restore price stability and support jobs.
• BoC Governor Tiff Macklem said that Canada needs to take a "more independent path" from the US.

USD/CAD halts its three-day winning streak, trading around 1.3890 during the Asian hours on Thursday. The pair loses ground as the US Dollar (USD) corrects downwards after registering more than 0.5% gains in the previous session.

Traders would likely observe the upcoming US Q2 Gross Domestic Product Annualized later in the day. Focus will shift toward Personal Consumption Expenditures (PCE) Price Index data, the Federal Reserve's preferred inflation gauge, due later on Friday.

The US Dollar gained ground as the US Federal Reserve (Fed) Chair Jerome Powell struck a cautious note, stressing that the US central bank must weigh stubborn inflation against a softening job market, calling it "a challenging situation" and reiterating comments from last week. However, the CME FedWatch tool suggests that money markets are currently pricing in nearly a 92% possibility of a Fed rate cut in October, up from 87% a week earlier.

San Francisco Fed President Mary Daly said on Wednesday that further rate reductions are likely to be needed, as the central bank works to restore price stability and provide necessary support to the labor market. Chicago Fed President Austan Goolsbee broke away from the overarching narrative of consecutive Fed rate cuts heading through the end of the year, widening the narrative gap between Fed incumbents and Donald Trump's newly minted Fed pick, Stephen Miran.

Bank of Canada (BoC) Governor Tiff Macklem said Monday that Canada must pursue a "more independent course" from the US, citing the Dollar's weakness and warning of systemic risks from shifting global trade and financial flows.