**Canada’s PMI Rates Showing Expansion** The Canadian Dollar (CAD) is affected by various factors, including Bank of Canada (BoC) interest rates, oil prices, economic health, inflation, and trade balance. Changes in oil prices directly influence the CAD since oil is Canada’s biggest export. Key economic data, like GDP and employment rates, also play a significant role in the CAD’s movement. Typically, higher interest rates strengthen the Canadian Dollar, attracting more foreign investment. Currently, the USD/CAD pair is trading close to its six-month high of 1.4140, but support for the US dollar seems to be fading. Contributing factors include a prolonged US government shutdown and rising expectations for a Federal Reserve rate cut in December. This scenario could be a turning point for the currency pair in the upcoming weeks. Pressure on the US dollar is increasing, especially after the latest Challenger Job Cuts report. This report revealed over 153,000 job cuts announced in October 2025, the highest for that month since the tech downturn in 2002. As a result, futures markets now show a greater than 70% chance of a 25-basis-point cut by the Federal Reserve at its next meeting. **US Government Shutdown Impacting Data Release** The lengthy US government shutdown is causing significant economic uncertainty and delaying the release of key data, like the Nonfarm Payrolls report. Looking back at the 35-day shutdown from 2018 to 2019, we can see the economic drag it caused. The current shutdown has already lasted longer. Without official data, traders are navigating blind, leaving the US dollar open to negative sentiment. On the Canadian side, the situation is mixed, which may soften a drastic drop in the USD/CAD pair. The latest seasonally-adjusted PMI has fallen to 52.4. Although it still indicates expansion, this shows a loss of momentum similar to what occurred in late 2022 before a period of slower growth. Additionally, recent fluctuations in WTI crude oil prices, dropping below $80 a barrel due to global growth concerns, could challenge the Canadian dollar. Given this context, traders should consider preparing for a potential decline in USD/CAD from its current heights. Purchasing put options on USD/CAD may be a wise move, allowing for profit from a drop while limiting potential losses if the US dollar unexpectedly rises. For those willing to take on more risk, starting short positions in USD/CAD futures with a stop-loss just above the recent 1.4140 high could be a strategic way to benefit from a market reversal. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now