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Canadian Dollar pressured by falling Oil, US Dollar strength

  • The Canadian Dollar remains weak, pressured by lower Oil prices and trade uncertainty.
  • The US Dollar strengthens, supported by reduced expectations of a further Fed rate cut in December.
  • Investors stay cautious as the US government shutdown enters its sixth week.

USD/CAD edges higher on Monday, up 0.20% for the day at 1.4040 at the time ot writing, but its bullish momentum appears to be fading below the 1.4050 level. The Canadian Dollar (CAD) struggles to recover, weighed down by falling Crude Oil prices, while the US Dollar (USD) benefits from a shift in market expectations after the Federal Reserve (Fed) signaled a more cautious stance on further policy easing in December.

During the press conference following last week’s monetary policy meeting, Fed Chair Jerome Powell said that another interest rate cut this year was “far from certain”, emphasizing that policymakers needed to wait until official data releases resume amid the ongoing US government shutdown. According to the CME FedWatch tool, the chances of a 25-basis-point cut in December have fallen to about 69%, down from over 90% before the meeting.

This more hawkish tone from the Fed supports the US Dollar and dampens risk appetite, especially as the US government shutdown extends into its sixth week with no resolution in sight. The prolonged fiscal impasse continues to weigh on confidence in the United States (US), limiting investors’ appetite for commodity-linked currencies such as the Loonie.

At the same time, falling Oil prices are adding pressure on the Canadian currency. West Texas Intermediate (WTI) US Oil retreats toward $60.50 after briefly rising above $61.00 earlier in the day, hurt by the strengthening US Dollar despite the Organization of the Petroleum Exporting Countries and its allies (OPEC+) announcing a pause in production hikes starting in the first quarter of 2026. This decline in Oil, Canada’s main export, further undermines the CAD’s outlook.

On the Canadian side, Commerzbank notes that recent trade tensions between Ottawa and Washington continue to weigh on sentiment. According to FX analyst Michael Pfister, “a sustainable appreciation of the Canadian Dollar is still some time away,” as economic risks continue to outweigh opportunities in the current environment.

Market participants will now focus on the release of the US Institute for Supply Management’s (ISM) Manufacturing Purchasing Managers Index (PMI) for October later in the day, a key indicator as official data publications remain suspended due to the shutdown.

US Dollar Price Today

The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Swiss Franc.

USDEURGBPJPYCADAUDNZDCHF
USD0.17%0.09%0.12%0.19%-0.05%-0.02%0.31%
EUR-0.17%-0.07%-0.07%0.02%-0.22%-0.17%0.16%
GBP-0.09%0.07%0.04%0.09%-0.12%-0.10%0.25%
JPY-0.12%0.07%-0.04%0.06%-0.16%0.00%0.23%
CAD-0.19%-0.02%-0.09%-0.06%-0.27%-0.19%0.14%
AUD0.05%0.22%0.12%0.16%0.27%0.05%0.42%
NZD0.02%0.17%0.10%-0.00%0.19%-0.05%0.35%
CHF-0.31%-0.16%-0.25%-0.23%-0.14%-0.42%-0.35%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).

Author

Ghiles Guezout

Ghiles Guezout is a Market Analyst with a strong background in stock market investments, trading, and cryptocurrencies. He combines fundamental and technical analysis skills to identify market opportunities.

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