During Tuesday’s Asian session, USD/CAD failed to extend its modest rebound off the 1.3800 floor—the lowest level since September 22—and slipped to around 1.3845–1.3850. Traders remain cautious about taking strong directional positions amid mixed fundamental signals.
Last Friday’s surprisingly strong Canadian jobs report reinforced the Bank of Canada’s hawkish bias, underpinning the loonie and weighing on USD/CAD. That downside, however, is capped by President Trump’s threat to impose new tariffs on farm imports, including Canadian fertilizer and Indian rice.
At the same time, crude oil is stabilizing after yesterday’s sharp losses, limiting further gains in the commodity-linked Canadian dollar and lending some support to USD/CAD. Bullish conviction is also dampened by growing market expectations for additional Fed rate cuts, which have capped the recent US dollar recovery from late-October lows.
Investors are now waiting on the sidelines for two key central-bank events: the BoC’s policy announcement and Wednesday’s FOMC decision. Today’s US data releases—the ADP employment change and JOLTS job openings—could spark some movement, but the divergent outlooks of the BoC and the Fed suggest USD/CAD bulls should remain wary.
