The USD/CAD pair is down 0.12%, trading around 1.4030 during the Asian session on Monday. The Canadian Dollar is gaining strength due to solid job data released from Canada last Friday. Recently, it was reported that the Canadian economy added 66,600 jobs, which was much better than the expected loss of 2,500 jobs. The unemployment rate also dropped to 6.9%, down from 7.1%. This is the lowest rate since July 2021.

Strength in the Canadian Economy

This improvement in jobs may ease concerns for the Bank of Canada regarding the need for interest rate cuts. Meanwhile, the US Dollar is stable thanks to hopes of resolving the ongoing US government shutdown. Senators are set to vote on a House-approved bill to keep the government funded through January 2026. If successful, this could improve consumer sentiment in the US, which has suffered due to the shutdown. The preliminary Michigan Consumer Sentiment Index for November fell to 50.3, the lowest in over three years. Analysts were surprised, expecting only a slight decline to 53.2 from the previous 53.6. The USD/CAD pair is slipping towards 1.4030, driven by the strong job numbers from Canada. Adding 66.6K jobs in October, despite the forecast of job losses, has strengthened the Canadian dollar. This robust labor market indicates that the Bank of Canada may not need to cut interest rates anytime soon.

US Legislative News and Market Effects

The strong outlook for Canada contrasts with a weak US dollar, which is only stable due to hopes of ending the 40-day federal shutdown. With Canadian inflation remaining above 3% in October 2025, this solid jobs report supports the Bank of Canada maintaining its current strict policy. This situation highlights a significant difference from the US, where the shutdown has negatively affected economic outlook. The news of a possible funding agreement through January 2026 may cause a temporary boost for the US dollar, but its overall impact may be limited. Following the 35-day shutdown in 2019, the dollar’s recovery was modest as market focus quickly returned to fundamental economic data. The early Michigan Consumer Sentiment reading of 50.3 for November indicates considerable damage from the shutdown. In the upcoming weeks, it might be wise to consider buying put options on USD/CAD to profit from a possible decline. If the pair falls below the key 1.4000 level, it could drop further towards the 1.38 support levels seen earlier in the third quarter of 2025. This strategy puts us in a good position to benefit from the favorable Canadian economic signals. To manage the risk of a sudden, brief US dollar rally if a shutdown deal is reached, a bear put spread could be a more cautious strategy. This method limits potential profit but also clearly defines our maximum loss. It allows us to stay bearish while protecting against unexpected short-term volatility. Create your live VT Markets account and start trading now.

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