Insights 
VT 
In September, Canadian portfolio investment in foreign securities increased to $22.12 billion, up from the previous $19.51 billion. This rise shows an increase in interest in foreign markets.
The stability of the British Pound against the US Dollar around 1.3165 is of note as markets prepare for US jobs data. Elsewhere, EUR/GBP has retreated due to profit-taking and Bank of England comments.
Market Movements and Analysis
In the commodities market, gold remains steady, trading around $4,000 an ounce without a strong directional push. Meanwhile, the cryptocurrency market is witnessing mixed movements, with Bitcoin trading above $95,000 and altcoins like Ethereum and Ripple trying to recover.
US economic data remains in focus for the coming week, influencing market mood, while tech companies, including Nvidia, are under scrutiny. The stock market mood has calmed, with US stock futures pointing to minor gains after Friday’s sell-off.
The recent report showing Canadian portfolio investment in foreign securities hitting $22.12 billion is a significant signal. This capital outflow suggests a weakening Canadian dollar, a trend we’ve seen building since the major outflows observed throughout 2024. We should consider trades that benefit from a declining CAD, as this data indicates a lack of domestic confidence.
US Dollar Dominance
A strong US dollar is the main story right now, driven by the market pricing out Federal Reserve rate cuts. The CME FedWatch Tool now shows less than a 20% chance of a rate cut in the next quarter, reinforcing the hawkish sentiment that has been building since the inflation fight of 2023-2024. This explains the pressure we are seeing on pairs like EUR/USD, which is struggling to hold above 1.15, and GBP/USD near 1.31.
Even with WTI crude oil prices stabilizing around the $85 per barrel mark, the Canadian dollar is not getting its usual lift. This divergence is telling, indicating that the overwhelming strength of the US dollar and domestic capital flight are overriding the positive influence from oil. The CAD’s sensitivity to oil seems to have diminished in this environment, unlike what we saw in previous commodity cycles.
Given these dynamics, going long on the USD/CAD pair looks like a compelling trade over the next few weeks. With the VIX, a key measure of market fear, hovering just above 18, there is enough underlying anxiety to justify using options. Buying call options on USD/CAD could offer upside exposure while clearly defining risk in this uncertain market.
Outside of currencies, we see assets like Gold struggling for direction below $4,100, capped by the firm dollar and lack of appetite for Fed easing. Similarly, while Bitcoin is holding above $95,000, the broader market deleveraging we saw earlier in 2025 suggests any rallies should be treated with caution. The risk-off sentiment driven by US monetary policy remains a headwind for these assets.
