USD/CAD is falling for the second consecutive session, trading around 1.4010 during Monday’s European hours. This drop is due to strong Canadian labor data, which has led to expectations that the Bank of Canada might pause its easing measures. Statistics Canada reported that the unemployment rate fell to 6.9% in October, down from 7.1% in September. Employment rose by 66.6K jobs, contrary to forecasts that predicted a slight decrease.

Canadian Dollar Gains from Rising Oil Prices

The Canadian Dollar is getting a boost as oil prices increase. Canada is the U.S.’s largest crude oil exporter. West Texas Intermediate is up for the second day, trading around $60.20 per barrel, fueled by hopes that the U.S. government shutdown might end soon. The U.S. Dollar remains weak after the Senate approved a deal to help end the government shutdown. However, this deal still needs approval from the House of Representatives and the President, which could take several days. Key factors affecting the Canadian Dollar include the Bank of Canada’s interest rates, oil prices, economic health, inflation, and trade balance. The Bank of Canada sets interest rates to control inflation, aiming for a range of 1-3%. Economic indicators like GDP, employment, and PMIs also influence the strength of the Canadian Dollar.

USDCAD Faces Challenges from Canadian Economic Strength

As of November 10, 2025, the USD/CAD pair shows weakness around the 1.3800 level, driven by familiar economic forces. These dynamics remind traders of earlier times when a robust Canadian economy contrasted with a hesitant U.S. economy. Traders may need to reconsider any long positions on the U.S. Dollar against the Canadian Dollar. The path of the Bank of Canada (BoC) is again a major factor, as it has been in the past. Following Canada’s recent jobs report for October 2025, which showed an unexpected drop in the unemployment rate to 6.1%, the market has lowered expectations for further BoC rate cuts in early 2026. Data from overnight index swaps now indicates only a 25% chance of a cut in the first quarter, down from over 60% a month ago. This strengthens the Canadian Dollar, as higher interest rates attract foreign investment. Additionally, West Texas Intermediate (WTI) crude oil prices have been firm, recently climbing back above $78 per barrel due to OPEC+ maintaining supply discipline. As a major oil exporter, rising oil prices significantly boost the loonie. On the other hand, the U.S. Dollar is facing challenges from political uncertainty post-election. Historically, political gridlock or transitions in Washington, as seen during past government shutdowns, tend to weigh on the dollar. With the results of last week’s election still being processed, investor caution is limiting the greenback’s potential gains. Given these combined factors, traders should consider strategies that could benefit from further declines in USD/CAD in the upcoming weeks. Bearish positions, such as buying CAD call options or selling USD/CAD futures, might be wise. If these economic and political trends continue, the pair could test the 1.3650 support level. Create your live VT Markets account and start trading now.

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