Insights 
VT 
USD/CAD is falling for a second session, trading around 1.4010 during Monday’s European hours. This decline is linked to strong Canadian labour data, sparking expectations that the Bank of Canada might pause its easing cycle.
Statistics Canada reported the unemployment rate dropped to 6.9% in October from 7.1% in September. Employment grew by 66.6K jobs, against forecasts of a slight decrease.
Canadian Dollar Strengthened by Rising Oil Prices
The Canadian Dollar gains support as oil prices rise, with Canada being the US’s largest crude exporter. West Texas Intermediate is up for the second session, trading around $60.20 per barrel, amid hopes the US government shutdown might end.
The US Dollar remains subdued following the Senate’s approval of an initial deal to end the government shutdown. This deal requires further approval from the House of Representatives and the President, possibly taking several days.
Key factors affecting the Canadian Dollar include Bank of Canada’s interest rates, oil prices, economic health, inflation, and trade balance. The Bank of Canada adjusts interest rates to manage inflation between 1-3%. Canada’s economy, influenced by data like GDP, employment, and PMIs, also impacts the Canadian Dollar’s strength.
USDCAD Facing Headwinds from Canadian Economic Conditions
As of November 10, 2025, we are seeing the USD/CAD pair exhibit weakness around the 1.3800 level, a trend driven by familiar fundamental forces. These dynamics are reminding us of past periods where a strong Canadian economy diverged from a hesitant United States. This situation suggests traders should re-evaluate any long positions on the US Dollar against its Canadian counterpart.
The Bank of Canada’s (BoC) path is once again a primary driver, much like it has been in previous cycles. After Canada’s most recent jobs report for October 2025 showed the unemployment rate unexpectedly falling to 6.1%, the market has reduced its bets on further BoC rate cuts in early 2026. Data from overnight index swaps now imply only a 25% chance of a cut in the first quarter, down from over 60% just a month ago.
This strengthens the case for the Canadian Dollar, as higher relative interest rates attract foreign capital. We are also seeing West Texas Intermediate (WTI) crude oil prices firm up, recently climbing back above $78 per barrel on news of OPEC+ maintaining supply discipline. As Canada is a major oil exporter, this price strength provides a significant tailwind for the loonie.
On the other side of the pair, the US Dollar is facing headwinds from post-election political uncertainty. Historically, as we saw during the government shutdowns in the late 2010s, periods of political gridlock or transition in Washington tend to weigh on the dollar. With the final results of last week’s election still being processed and debated, investor caution is limiting upside for the greenback.
Given these converging factors, derivative traders should consider strategies that benefit from further USD/CAD downside in the coming weeks. Establishing bearish positions, such as buying CAD call options or selling USD/CAD futures, could be prudent. We see the potential for the pair to test the 1.3650 support level if these economic and political trends continue to hold.
