USD/CAD Near One-Month Highs as Markets Brace for U.S. and Canadian Jobs Data

Dollar Strength Keeps Loonie on Defensive: The U.S. dollar remains firm against the Canadian dollar, pushing USD/CAD near 1.38–1.39, levels last seen in early December. Broad dollar strength continues to weigh on the Loonie, while a modest rebound in oil prices has provided limited support, reflecting Canada’s position as a major crude exporter.


U.S. Economic Signals Reinforce Dollar

Recent U.S. data have bolstered the greenback ahead of the key jobs report. Initial jobless claims edged up slightly to 208,000, while continuing claims hovered near 1.91 million, signaling steady labor-market conditions. Meanwhile, the U.S. trade deficit narrowed sharply in October, surprising markets and underpinning the dollar’s resilience.


Eyes on U.S. Nonfarm Payrolls

All focus is now on Friday’s Nonfarm Payrolls (NFP) report, which is expected to show modest job growth following recent subdued readings. A weaker-than-expected outcome could increase expectations for Federal Reserve easing, whereas stronger employment data may temper rate-cut bets, potentially boosting the dollar further.


Canadian Labor Market in Focus

Across the border, Canada’s employment data are also under scrutiny. Forecasts suggest a slight decline in December after robust gains in November, while oil price dynamics could influence the Loonie’s near-term performance.


Monetary Policy Divergence Adds Pressure

The Bank of Canada is widely expected to hold rates steady through much of 2026. In contrast, the Federal Reserve’s decisions on rate cuts remain in flux, creating potential divergence that could support continued dollar strength.


Caution and Flexibility Are Key

Mixed signals from employment reports, trade figures, and oil markets have left traders cautious. Maintaining flexible positions is critical, as even small deviations in job or wage data could trigger notable moves in USD/CAD and broader currency markets.


Volatility Awaits

While broad U.S. dollar strength dominates, incoming labor data and oil price trends will be decisive. Investors are advised to stay alert and adaptable, as surprises from either U.S. or Canadian reports could create short-term volatility, offering both opportunities and risks for traders.