USD\/CAD rose for a fourth day and traded near 1.3628 as the US Dollar stayed firm. Trading was range-bound due to thin liquidity from US President\u2019s Day and Canada\u2019s Family Day.<\/p>\n
Markets are focused on Canada\u2019s January CPI on Tuesday. Forecasts are 0.1% month-on-month after -0.2% in December, and 2.4% year-on-year, unchanged.<\/p>\n
The Bank of Canada said in January that policy is aimed at keeping inflation near 2%. It also said the current policy rate \u201cremains appropriate\u201d, while noting headwinds from trade uncertainty linked to US tariffs.<\/p>\n
Oil prices offered some support to the Canadian Dollar. WTI traded around $63.25, up nearly 1.0% on the day.<\/p>\n
In the US, rate-cut expectations eased after labour data showed stabilising conditions. Nonfarm Payrolls rose by 130K after 48K, and unemployment fell to 4.3% from 4.4%.<\/p>\n
US inflation data was softer, with CPI at 0.2% MoM in January versus 0.3% in December, and 2.4% YoY versus 2.7%. Traders still price more than 50 bps of cuts in 2026, while DXY hovered near 97.00.<\/p>\n
The next data points include FOMC minutes on Wednesday, then core PCE and Q4 GDP on Friday.<\/p>\n
We are seeing the USD\/CAD pair move higher, holding near 1.3550 in quiet trading. Today’s thin liquidity, due to holidays in both the US and Canada, is keeping the pair within a tight range. This market inactivity presents a temporary calm before key data releases later this week.<\/p>\n
Attention is focused on Canada’s inflation report due this Tuesday. Recent data showed the Canadian economy added a stronger-than-expected 37,000 jobs in January 2026, but wage growth has been cooling, creating a mixed picture for the Bank of Canada. A hot CPI reading above the current 2.8% annual rate would likely force the BoC to delay any planned interest rate cuts, strengthening the loonie.<\/p>\n
Meanwhile, the US Dollar is finding support as the market dials back expectations for aggressive Federal Reserve rate cuts. The January 2026 jobs report showed a solid gain of 190,000 payrolls, and last week\u2019s CPI data came in slightly firm at 3.2%, reminding us that the path back to 2% inflation is not a straight line. This persistent inflation suggests the Fed can afford to remain patient.<\/p>\n
This is a different environment from what we saw around this time in 2025. Back then, we were looking at a market pricing in over 50 basis points of Fed cuts for the year, with inflation easing to 2.4%. The dollar was also facing headwinds from trade policy uncertainty, a factor that has since faded.<\/p>\n
Elevated oil prices are providing a floor for the Canadian dollar, preventing a more significant decline. With WTI crude currently trading firmly above $85 a barrel due to ongoing supply discipline from OPEC+ and steady global demand, it continues to be a supportive factor for Canada’s currency. This helps offset some of the greenback’s underlying strength.<\/p>\n
Given the expected volatility around the upcoming data, we should consider buying options to protect against sharp moves. A straddle on USD\/CAD before Tuesday’s CPI release could be an effective way to play a potential breakout in either direction. For now, the pair seems capped by resistance at 1.3600, but a surprisingly strong inflation number could easily push it back toward the 1.3450 support level.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" USD\/CAD climbed near 1.3628 on firm dollar, thin holiday trade; focus turns to Canada CPI, US data.<\/p>\n","protected":false},"author":62,"featured_media":16961,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-42009","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\/42009","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=42009"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/42009\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/16961"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=42009"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=42009"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=42009"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}