The USD\/CAD pair rebounded after touching a three-month low, climbing to 1.3770 from 1.3730. The US Dollar found footing despite mixed labour data that did not heighten expectations for further Federal Reserve rate cuts. <\/p>\n
US November jobs report indicated payroll growth of 64K, slightly exceeding forecasts, while October figures saw significant downward revision. The unemployment rate climbing to 4.6%, the highest since 2021, hints at a cooling labour market. Retail sales were flat, suggesting waning consumer demand momentum. <\/p>\n
Federal Reserve officials are divided on future monetary policy, with some anticipating no further cuts next year. As per the Wall Street Journal, President Trump plans an interview with Fed Governor Christopher Waller for a potential Fed leadership role. Waller is deemed favourable by economists for his consistent rate cut arguments. <\/p>\n
The Canadian Dollar may gain support from the Bank of Canada’s decision to hold interest rates steady at 2.25%. Canadian inflation data showed steady headline CPI at 2.2%, and trimmed-mean inflation dropped to a ten-month low of 2.8%, aligning near the BoC\u2019s target. Key factors influencing the Canadian Dollar include BoC interest rates, oil prices, economic health, and market sentiment.<\/p>\n
Based on the current date of December 17, 2025, the recent rebound in USD\/CAD above 1.3750 appears to be a counter-trend move within a weakening US economic picture. We’ve watched the US unemployment rate climb from below 4% earlier in the year to its current 4.6% level, signaling a clear cooling trend. This bounce presents an opportunity for traders to re-evaluate bearish positions on the US dollar.<\/p>\n
The key conflict we see is between the Federal Reserve’s official projection of a single rate cut in 2026 and market pricing. Futures markets, as reflected in the CME FedWatch Tool, are currently pricing in a more than 70% probability of at least two rate cuts by the end of next year. The potential appointment of Christopher Waller as the new Fed Chair is a critical event that could force the Fed’s hand toward a more aggressive easing policy, putting pressure on the dollar.<\/p>\n
Meanwhile, the Canadian dollar is supported by a stable Bank of Canada, which views its current policy as appropriate with inflation hovering near its target. This fundamental strength is bolstered by WTI crude oil prices, which have stabilized around $85 per barrel this month after a volatile autumn. This creates a clear policy divergence that favors the Canadian dollar over its US counterpart in the medium term.<\/p>\n
For derivative traders, this suggests positioning for a lower USD\/CAD in the weeks ahead. We should consider buying Canadian dollar call options or US dollar put options to capitalize on expected downside. Given the uncertainty surrounding the Fed leadership, using strategies like bearish put spreads can offer a way to profit from a decline while clearly defining risk.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" USD\/CAD rebounds from lows as mixed U.S. data, BoC rate hold, and inflation influence market sentiment.<\/p>\n","protected":false},"author":62,"featured_media":16965,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-37051","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/37051","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=37051"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/37051\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/16965"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=37051"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=37051"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=37051"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}