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USD/CAD rises as US Dollar strengthens following employment figures, while Canadian Dollar faces downward pressure due to Oil prices

USD/CAD rises as US Dollar strengthens following employment figures, while Canadian Dollar faces downward pressure due to Oil prices

101 finance101 finance2026/01/09 15:48
By:101 finance

USD/CAD Rises as US Dollar Strengthens and Canadian Dollar Faces Headwinds

The USD/CAD currency pair hovered near 1.3900 on Friday, marking a 0.25% increase for the day. This upward movement is driven by a mix of economic developments that are boosting the US Dollar (USD) while putting pressure on the Canadian Dollar (CAD).

The US Dollar has gained traction following the release of varied employment figures from the United States. Although December’s Nonfarm Payrolls (NFP) numbers fell short of forecasts, the unemployment rate edged lower and wage growth picked up pace. These results suggest that, while the labor market is gradually losing some steam, it remains robust overall. As a result, expectations have grown that the Federal Reserve (Fed) will proceed cautiously, likely maintaining current interest rates at its January meeting. However, futures markets still anticipate the possibility of gradual rate cuts later in the year.

Meanwhile, the Canadian Dollar is under strain due to ongoing softness in Oil prices—a crucial factor for Canada’s economy. The likelihood of increased Oil shipments from Venezuela to the US has heightened worries about intensified competition for Canadian Crude, especially heavier grades. This scenario could negatively impact Canada’s energy earnings and reduce the attractiveness of the CAD relative to the USD.

Domestically, Canada’s labor market is showing signs of an uneven recovery. RBC reports that job growth has been modest and the unemployment rate has risen, indicating a slow and inconsistent improvement in economic conditions. This outlook is in line with the Bank of Canada’s (BoC) current cautious approach to interest rates, which offers little immediate support for the Canadian Dollar.

Overall, the contrast in economic momentum between the US and Canada, along with challenging Oil market conditions, continues to underpin a positive outlook for USD/CAD in the short term. Investors remain attentive to upcoming economic reports and central bank policy updates from both countries.

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