Insights 
VT 
The Canadian Dollar (CAD) rose over one-third of one percent against the US Dollar (USD), reaching recent highs. The gain pushed the USD/CAD to fresh multi-month lows below 1.3800.
The Federal Reserve’s rate decision is highly anticipated, as there are expectations of a potential shift towards rate cuts. Meanwhile, Canadian economic data shows a downturn with the Ivey PMI dropping below 48.0, against an expected 51.2.
Joint Press Conference
A joint press conference between Canadian PM Mark Carney and US President Donald Trump emphasized the USMCA trade agreement’s current state, with possible renegotiations hinted by Trump. Despite uncertainties, the CAD found higher ground supported by a Greenback selloff.
Factors influencing the CAD include interest rates set by the Bank of Canada, oil prices, and the health of the Canadian economy. The 200-day Exponential Moving Average of USD/CAD indicates potential further declines.
Inflation and macroeconomic data such as GDP and employment figures can impact the CAD’s value. A robust economy can strengthen the CAD, whereas weak data may lead to its decline. Trading foreign currency carries high risk, necessitating thorough research.
The Canadian Dollar’s upward movement, which trimmed the USD/CAD pair to levels last seen several months ago, has been aided by broader weakness in the US Dollar. That slide, tied in large part to shifting sentiment around Federal Reserve policy, has opened the door for commodity-linked currencies like Canada’s to recover lost ground. But there’s more nuance here—it’s not just about what’s happening south of the border. Despite discouraging signals from domestic economic indicators, especially the latest Ivey PMI figures coming in well under the expansionary threshold, the CAD has held its own.
We’ve been watching that sub-48.0 reading with concern. Expectations had been set closer to 51.2, so it’s not a small miss. Under normal circumstances, this sort of surprise would weigh heavily on a currency, given that such data points to weakness in purchasing activity—a proxy for economic momentum. Nevertheless, the broader market reaction suggests traders are more focused on spillover effects from US monetary developments than internal Canadian softness, at least for now.
The joint news conference between Carney and Trump drew some market attention, primarily due to the USMCA mentions. Though nobody should be taken by surprise when trade terms resurface in political conversation, the subtle allusions to revisiting parts of the agreement introduced another layer of potential volatility. Still, markets seemed to interpret the tone as more procedural than confrontational. That helped limit any lasting negative impact on the CAD in the immediate aftermath, although we’ll need to keep an eye on any policy follow-through—words often turn into press releases and policy guidance down the line.
Policy Outlook And Economic Indicators
There’s also the broader discussion around policy outlooks. Rate expectations—both real and implied—are now leaning towards a more accommodative stance from the Fed. That’s weakened the Greenback further and given northern currencies some breathing room. The technical picture reinforces this. Watching the 200-day EMA piercing downward, we note that such signals tend to coincide with more protracted downward moves in the USD/CAD pair. Risk appetite, technical trading, and real-money flows often respond slowly but definitively to these trend lines.
That being said, no one should simply fall back onto technical indicators without reinforcing them with fundamental shifts. For us, the guideposts remain inflation data, GDP performance, and changing dynamics in the jobs market. Those are not just numbers—they form the scaffolding for interest rate decisions, which in turn drive currency trends.
Oil, meanwhile, remains a particularly sensitive variable. As a major export and a vital input for the broader economy, movements in crude prices still ripple through the Canadian Dollar’s valuation. We’ve already seen this relationship flare up during tight supply cycles and geopolitical disruptions, both of which pull CAD along with them. But given the choppy global demand outlook, we’re not yet seeing consistent support from this channel.
Now, for those of us watching rate markets—particularly in the derivatives space—volatility pricing has not yet fully caught up with policy speculation. This creates opportunity, especially where implied volatility remains underpriced relative to historical ranges. Calendar spreads and directional structures may show value when paired with macro-event placement, such as central bank announcements or employment releases.
There is little tolerance for passive exposure in this environment. We’ll be keeping an ear to the data, an eye on technical levels, and adjusting positioning as signals become stronger or weaker. Flexibility and speed will be key in these short windows between data releases and policy pronouncements. With risk premiums skewed by sentiment shifts more often than fact, our edge comes from rapid recalibration.
