While speaking before the House of Commons Finance Committee on Thursday, Bank of Canada (BoC) Governor Tiff Macklem said Canadian inflation rate will probably stay close to 2.9% for the next several months, citing rising gasoline prices, per Reuters.

"Here is a limit to how far US and Canadian interest rates can diverge, certainly we're not close to that limit," Macklem added and reiterated that the BoC is looking for reassurance that the recent fall in underlying inflation will be sustained, when asked about the timing of a policy pivot.

Market reaction

USD/CAD edged slightly lower following these comments and was last seen losing 0.2% on the day at 1.3710.