USD/CAD trades at 1.4131 as the Canadian Dollar struggles against a weak labor market, falling oil prices, and a hawkish Federal Reserve outlook ahead of Tuesday's US CPI data.
WTI closed roughly 12% lower last week and is down more than 3% on Monday. Democrats' midterm victory and traders' bets that Congress would press Trump to end the war with Iran drove the sell-off, and the decline extended after Trump played down the likelihood of renewed strikes. Talks between Trump, JD Vance and Qatar's prime minister aimed at ending the conflict keep the de-escalation pressure on prices.
The pair rebounded to around 1.4131 from an intraday low of 1.4077 even as the DXY fell 0.45%, showing CAD-specific weakness. Canada lost 4.7K jobs in October against a 13.6K gain expected and unemployment rose to 6.7%, while the Fed side saw October NFP of 165K versus 65K forecast and about an 80% chance of a December hike priced in. Falling oil, down more than 3% on Monday after a roughly 12% weekly drop, adds a third headwind for the Canadian Dollar.
The Canadian Dollar is one of the day's weakest majors, down against every listed peer except the Swiss Franc, including -0.05% versus USD and -1.51% versus NZD. Three consecutive months of job losses, rising unemployment at 6.7%, falling crude prices and a hawkish Fed pricing about 80% odds of a December hike all weigh on CAD. The BoC's dilemma between containing inflation and supporting a weakening labour market limits the currency's support.
The Canadian Dollar faces significant pressure as October employment fell by 4.7K, marking a third consecutive month of losses and pushing the unemployment rate to 6.7%. Simultaneously, WTI crude oil prices dropped more than 3% on Monday, extending last week's 12% decline amid geopolitical de-escalation hopes. Despite a 0.45% dip in the US Dollar Index, the USD/CAD pair climbed to 1.4131 as markets price in an 80% probability of a Federal Reserve rate hike in December.
Democrats' midterm victory led traders to bet Congress would press President Trump to end the war with Iran, and the decline continued Monday after Trump played down the likelihood of renewed strikes.
The article notes crude remains above pre-war levels and prices could rise again if talks to end the conflict stall or tensions escalate.
Canada's own data and oil prices are dragging it down: a third straight month of job losses, unemployment up to 6.7%, and oil down more than 3% on Monday after a roughly 12% weekly drop. The pair rose even as the Dollar Index fell 0.45%.
Tuesday's US CPI is the key event: a hotter-than-expected reading could strengthen the case for a December Fed hike and lift the US Dollar, while a softer print could help the Canadian Dollar regain ground.
A third straight month of Canadian job losses, unemployment up to 6.7%, falling oil prices, and a hawkish Federal Reserve with roughly 80% odds priced in for a December rate hike.
A softer-than-expected US CPI reading on Tuesday could weaken the case for a December Fed hike and help the Canadian Dollar regain ground, according to the article.