Insights 
VT 
The Canadian Dollar remains weak against the US Dollar, showing limited attempt at a technical recovery. Despite recent stability, the Canadian Ivey Purchasing Managers Index for October showed a greater decline in business sentiment than anticipated, indicating ongoing economic challenges.
The Loonie has decreased by 1.81% against the US Dollar over six trading days. The Ivey PMI dropped to 52.4, further than the expected fall from 59.8 to 55.2. Meanwhile, the US experienced substantial job cuts, marking one of the highest non-Covid reports, with 153K jobs lost in October.
Usdcad Momentum
USD/CAD maintains its upward momentum, closing near 1.4120 after rebounding from the 200-day Exponential Moving Average at 1.3900. The pair is experiencing overbought conditions, with resistance at 1.4150 and support levels near 1.4000 and 1.3900. As the daily RSI hovers around 70, traders are monitoring whether USD/CAD will hold above 1.41.
The Canadian Dollar is influenced by several factors such as the Bank of Canada’s interest rates, Oil prices, and macroeconomic data. Economic health, oil price fluctuations, and inflation impact CAD, with the health of the US economy also playing a role. Macroeconomic indicators and Bank of Canada’s policies directly affect the CAD’s value.
Given the weakness in the Canadian dollar, we see the USD/CAD pair holding firm above the 1.4100 level. This follows disappointing Canadian Ivey PMI data and recent inflation figures from September 2025 showing CPI at 2.9%, which gives the Bank of Canada little reason to support the currency with a more hawkish tone. With the Canadian economy showing signs of slowing, the path of least resistance for the loonie appears to be downward.
A key driver for this is the price of oil, which continues to put pressure on the Canadian dollar. Western Canadian Select has fallen over 8% in the past month to trade near $68 a barrel, a direct result of slowing global demand forecasts. This decline in Canada’s largest export directly weighs on the value of the currency, and we expect this trend to continue as long as oil prices remain soft.
Impact Of Us Factors
On the other side of the pair, the ongoing US government shutdown, now in its 42nd day, has created significant uncertainty by delaying official economic data like Non-Farm Payrolls. This lack of clear data has ironically strengthened the US dollar as investors seek safety, despite worrying private data like the recent Challenger Job Cuts report. The greenback is acting as a haven, and we are seeing that play out against the loonie.
For derivative traders, the overbought RSI signal near 70 suggests that outright long positions could be risky, making options a more prudent strategy. We believe buying call options on USD/CAD with strike prices above 1.4150 for the coming weeks offers a way to capitalize on further upside toward the 1.4415 target. This approach allows traders to limit downside risk if the pair sees a temporary pullback.
The current political uncertainty in the U.S. has also caused implied volatility to rise, which traders can use to their advantage. Looking back at the market swings during the 2024 US election, we saw how volatility can present opportunities. Traders anticipating a significant price move, but uncertain of the direction once the shutdown ends, could consider long straddles to profit from a breakout in either direction.
