Anticipating US Economic Data
Market participants are anticipating important US economic data releases, particularly the Nonfarm Payrolls report, which is expected to show an increase of 55,000 jobs. The Canadian Dollar faces possible pressure due to US and global access expectations to Venezuela’s oil reserves impacting Canadian Oil demand, compounded by speculation of future Venezuelan output potentially affecting Oil prices.
Canadian Dollar movements can be attributed to factors including the Bank of Canada’s interest rate decisions, Oil prices, and macroeconomic data. Economic indicators such as GDP, inflation, and employment heavily influence the CAD, with a strong economy suggesting potential interest rate increases by the Bank of Canada, thereby supporting the CAD, whereas weaker data could lead to a depreciation.
As we see USD/CAD holding near 1.3760, we are caught between two opposing forces. The recent US ISM manufacturing data from December 2025 showed a faster contraction, which should weaken the US dollar. However, the Canadian dollar is facing significant pressure from geopolitical events that are impacting oil prices.
The major development remains the new access to Venezuelan crude reserves, which continues to weigh on the oil market. WTI crude has already fallen over 9% since the mid-December 2025 highs, now trading near $68 a barrel, as the new interim government in Caracas has announced a target of restoring production to 1.2 million barrels per day by the end of 2026. This structural shift in supply is a powerful headwind for the Canadian dollar.
Focus on US Nonfarm Payrolls Report
This week’s primary focus will be the upcoming US Nonfarm Payrolls report, which could cause a significant move. The consensus forecast for a meager 55,000 jobs, following a downward revision to the November 2025 numbers, suggests the US economy is slowing down considerably. A much weaker-than-expected print could temporarily knock the US dollar lower and send USD/CAD down to test the 1.3700 level.
