|

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.

More from Ghiles Guezout
Share:

Editor's Picks

AUD/USD languishes near two-month low amid renewed Iran tensions

AUD/USD holds above 0.7000 during the Asian session on Wednesday, though it remains close to a nearly two-month low set the previous day. Fresh US strikes on Iran temper hopes for a peace deal and benefit the safe-haven US Dollar. Furthermore, inflationary concerns continue to fuel hawkish Fed expectations, lending additional support to the buck ahead of the US CPI report. Adding to this, reduced bets on an RBA rate hike in June cap the currency pair.


USD/JPY sits near 160.50 intervention zone as bulls shrug off Japan's strong PPI

USD/JPY consolidates just below mid-160.00s, or its highest level since late April, as economic concerns stemming from the Middle East conflict continue to undermine the Japanese Yen (JPY). Furthermore, a fresh wave of US strikes on Iran benefits the safe-haven US Dollar and acts as a tailwind for the currency pair, countering Japan's hotter-than-expected PPI report. However, intervention fears cap the upside as traders seem hesitant ahead of the US consumer inflation figures later this Wednesday.

Gold flirts with $4,200, lowest since March 23 on hawkish Fed bets

Gold drops to a fresh low since March 23, around the $4,200 mark during the Asian session on Wednesday, as fresh US strikes on Iran fuel inflationary concerns and bolster bets for more hawkish central banks, including the US Fed. Meanwhile, US Dollar bulls are turning cautious ahead of the US CPI report, which could limit bullion losses. However, the recent breakdown below the 200-day SMA suggests that the path of least resistance for the XAU/USD is to the downside.

Bitcoin sell-off pushes over 50% of circulating supply into loss, hinting at market bottom

Bitcoin dropped near $61,000 on Tuesday, with the latest sell-off pushing long-term market indicators toward levels historically associated with bear-market bottoms, according to a report by K33 Research.

When the chips are down, the AI tape starts to shake

The market came into Tuesday trying to sell investors the comforting ”Turnaround Tuesday” idea that Friday’s AI fracture was just another pothole on the road higher. By the close, that story had lost its bid. Monday’s dead cat bounce had done what dead cat bounces always do.

The US economy defies the rules: 100 days into the Oil shock and the recession signal is still missing

More than three months after the start of the Iran war and the resulting disruption to global energy markets, the US economy continues to display remarkable resilience. The conflict has triggered a sharp rise in Oil prices, reignited inflationary pressures and fueled widespread concerns about a potential economic slowdown.