US Dollar declines as USD/CAD stabilizes around 1.3760, influenced by oil prices

    by VT Markets
    /
    Jan 6, 2026

    Anticipating US Economic Data

    Market participants are looking forward to key US economic data releases, especially the Nonfarm Payrolls report. This report is predicted to show an increase of 55,000 jobs. The Canadian Dollar may face pressure due to US and global expectations regarding access to Venezuela’s oil reserves. This situation could impact the demand for Canadian oil and raise questions about future Venezuelan oil output and its effect on prices. The movements of the Canadian Dollar (CAD) depend on several factors, including the Bank of Canada’s interest rate decisions, oil prices, and macroeconomic data. Important indicators such as GDP, inflation, and employment play a significant role. A strong economy usually leads to possible interest rate hikes by the Bank of Canada, which supports the CAD. In contrast, weak data can cause the CAD to lose value. Currently, the USD/CAD is hovering around 1.3760, caught between two opposing trends. Recent US ISM manufacturing data from December 2025 indicates a faster contraction, likely weakening the US dollar. On the other hand, the Canadian dollar faces considerable pressure from geopolitical events affecting oil prices. A significant development is the new access to Venezuelan crude oil. This situation continues to impact the oil market negatively. WTI crude has dropped over 9% since mid-December 2025 and is now priced near $68 a barrel. The new interim government in Caracas aims to restore production to 1.2 million barrels per day by the end of 2026. This change in supply is a major challenge for the Canadian dollar.

    Focus on US Nonfarm Payrolls Report

    The main focus this week is the upcoming US Nonfarm Payrolls report, which might lead to a big market move. The consensus forecast suggests a modest increase of 55,000 jobs, following a previous downward revision of November 2025 numbers. This indicates that the US economy is slowing down significantly. If the report shows much weaker numbers than expected, it could cause the US dollar to drop temporarily and push USD/CAD down to the 1.3700 level. Create your live VT Markets account and start trading now.

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