USD/CAD climbed toward 1.4030 on Tuesday, up about 0.10%, as growing optimism over a swift resolution to the U.S. government shutdown outweighed the Canadian dollar’s strength. Investors are also awaiting fresh U.S. employment data for further direction.
The U.S. Senate approved a temporary funding bill that could end the record-long shutdown within days. The legislation now moves to the House of Representatives before heading to President Trump’s desk, bolstering confidence that federal operations will soon resume and supporting the U.S. dollar.
On the monetary front, Federal Reserve officials have signaled a dovish stance. Governor Stephen Miran noted that disinflation is ongoing and hinted at a possible 25–50 basis-point rate cut in December. According to the CME FedWatch tool, markets currently assign a 62% probability to further easing at the Fed’s year-end meeting, which caps the dollar’s upside.
In Canada, a resilient labour market has allowed the Bank of Canada to keep its policy rate unchanged at 2.25%. October’s unemployment rate fell to 6.9% from 7.1%, and employment rose by 66,600 jobs—marking a second month of stronger-than-expected gains. Leslie Preston, Senior Economist at TD Bank, says this data “will make the BoC more comfortable sitting on the sidelines and letting past rate cuts work their way through the economy.”
In the short term, USD/CAD’s path will depend on the final passage of the U.S. funding bill and market reactions to upcoming U.S. labour figures. Confirmation that the shutdown has ended could keep the pair above the 1.4000 mark, while Canada’s solid jobs data may limit further advances.
