06/01/26

49

The USD/CAD currency pair traded around 1.4100 during the early hours of Thursday’s European trading session, with the Canadian dollar gaining strength amid a rebound in crude oil prices. The upward movement in oil prices has positively impacted the commodity-linked Canadian dollar, particularly since Canada is the world’s largest oil exporter to the United States. As oil prices rise, it tends to bolster the Canadian dollar’s value due to increased revenue prospects for Canada’s energy sector.

Market participants are awaiting the release of Canada’s October Ivey Purchasing Managers Index (PMI), which is expected later today. This indicator will offer further insights into the health of Canada’s manufacturing and service sectors. Additionally, the Bank of Canada’s governor, Tiff Macklem, is scheduled to deliver a speech that could influence expectations around monetary policy and the currency’s movement in the short term.

In the United States, private employment figures released by ADP showed a rise of 42,000 jobs in October, surpassing analyst expectations and the previous month’s revised decline of 29,000. The stronger-than-anticipated data could help temper overall U.S. dollar losses, even as Federal Reserve policymakers maintain cautious views on future rate adjustments. While traders have priced in a roughly 70% likelihood of a December rate cut, this probability has decreased from earlier levels, reflecting ongoing uncertainty about the Fed’s policy direction.

The US dollar’s outlook remains influenced by central bank statements and macroeconomic data. Recent remarks from Fed Chair Jerome Powell have indicated that a rate cut in December is not imminent, contributing to the dollar’s resilience. Conversely, the broader outlook for the USD is also sensitive to developments in global risk sentiment and economic indicators.

Meanwhile, the Bank of Canada’s decision last week to cut its benchmark interest rate by 25 basis points to 2.25% signals a cautious stance amidst evolving economic conditions. The bank has indicated readiness to act further if necessary, highlighting its focus on maintaining inflation within target levels and supporting economic stability. Overall, interest rates, oil prices, economic data, and geopolitical factors continue to shape the trajectory of the Canadian dollar against its major peers.