The USD/CAD pair found support at 1.3625 and is now rising toward 1.3675 as traders await the US ADP Employment data. The US Dollar has gained slightly against the Canadian Dollar, hovering close to 1.3650 after dropping from weekly highs above 1.3700.
The market is keenly focused on the ADP report, especially due to the delayed Nonfarm Payrolls release caused by a partial government shutdown. The private sector is expected to add 48,000 jobs in January, up from December’s 41,000, but still below the 2024 monthly average of 186,000.
Supportive US Data
Current US data backs the Federal Reserve’s cautious approach to monetary easing, supported by the end of the short government shutdown. In Canada, the manufacturing sector is growing at its fastest pace in over a year, even with weak Gross Domestic Product growth.
Interest rates set by the Bank of Canada, oil prices, economic health, and trade balance are key factors influencing the Canadian Dollar. The Bank of Canada affects the CAD through its interest rate policies, while oil prices and inflation also significantly impact its value.
The USD/CAD pair remains near 1.3650, influenced by a weak US labor market outlook. The recent ADP employment report showed an increase of only 42,000 jobs, reinforcing the slowdown in job growth we’ve seen throughout 2025. This trend supports the Federal Reserve’s plan to continue monetary easing this year.
Economic Signals in Canada
In Canada, mixed economic signals are creating uncertainty. Strong manufacturing data from Monday contrasts with last month’s weak GDP figures and inflation reports showing core CPI just above 3%. We will be closely watching Bank of Canada Governor Macklem’s speech this week for any hints of a more aggressive stance that might support the Loonie.
We also need to consider oil prices, which have provided ongoing support for the Canadian Dollar. WTI crude prices have stayed above $75 per barrel for several weeks, representing a recovery from the lows seen in mid-2025. This price stability serves as a buffer for the Loonie and makes a purely bearish outlook on the currency more complicated.
Given these factors, the potential for the USD/CAD pair to rise appears limited in the short term. Derivative traders may want to consider strategies that take advantage of this perspective, such as selling out-of-the-money call options with strike prices above 1.3750. This strategy allows for earning premium while anticipating that major upward movements in the pair are unlikely in the coming weeks.
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