CAD

• USD/CAD holds firm above 1.3900 on track for its third consecutive weekly gain.
• Investors await the US Nonfarm Payrolls report amid holiday-thinned market volumes.
• Canada’s trade deficit rose to a six-month high in February.

The US Dollar (USD) keeps the upper hand against its Canadian counterpart on Friday, trading near 1.3925 at the moment of writing, with the 1.3966 year-to-date high at a relatively short distance. The pair is on track for its third consecutive weekly rally, with the Canadian Dollar (CAD) weighed by the risk-off sentiment stemming from the Iran war.

Trading volumes are expected to remain low, with most markets closed on Friday for the Good Friday bank holiday. During the US session, however, the US Nonfarm Payrolls report is likely to attract significant interest and might trigger wild FX movements due to the limited liquidity conditions

US Payrolls are seen bouncing up in March

The market consensus anticipates US net employment to have increased by 60K in March àttyially offsetting the 92K decline posted in February. The positive ADP employment reading seen earlier this week and the strong US ISM Manufacturing Purchasing Managers’ Index (PMI) have contributed to boosting investors’ expectations about March’s payroll figures.

Meanwhile, the war in the Middle East continues, keeping investors’ appetite for risk subdued. The UN Security Council is expected to vote on a proposal by Bahrain authorizing countries to use “all defensive means necessary” to reopen the Strait of Hormuz, an initiative that has been rejected by veto-wielding Chinese representatives.

Data released on Thursday showed that Canada’s Merchandise Trade Balance deficit widened to a six-month high at CAD 5.74 billion i (USD 14.4 billion) in February, as imports increased 8.4% to an all-time high of CAD 72.05 billion, offsetting the 6.4% rise in exports.

Also on Thursday, the President of the Federal Reserve (Fed) of Chicago, Austan Goolsbee, warned that the recent surge in Oil prices might complicate the central bank’s rate-setting activity in a context ot a “low-hire, low-fire” labour market. The impact on the US Dollar, however, was minimal.

• USD/CAD rises as the US Dollar strengthens after Trump’s remarks lacked clear Middle East de-escalation.
• Trump reiterated that Iran’s military capabilities were significantly weakened, signaling an end to the conflict.
• The Canadian Dollar may gain support as oil prices rise following Trump’s comments, boosting energy market sentiment.

USD/CAD rebounds after two days of losses, trading around 1.3900 during the Asian hours on Thursday. The pair appreciates as the US Dollar (USD) strengthens after US President Donald Trump’s latest address showed no clear Middle East de-escalation, keeping geopolitical risk elevated.

US President Donald Trump reiterated that Iran’s military capabilities have been significantly weakened, noting that its missile and drone capacity has been curtailed. Trump added that the US no longer relies on Middle Eastern oil. He emphasized that Iran’s naval and air forces have been severely diminished, with leadership losses further reducing its operational strength, while signaling that the US intends to conclude the conflict swiftly within 2-3 weeks.

The Greenback struggled as markets reassessed the US Federal Reserve’s (Fed) policy outlook amid shifting geopolitical risks, growth concerns, and persistent inflation pressures. The Fed kept interest rates unchanged at 3.50%–3.75% following its March 17–18, 2026 meeting. Nevertheless, the median dot plot still points to one 25-basis-point rate cut later in 2026, although some policymakers now anticipate no cuts this year.

Meanwhile, US Treasury yields are recovering, with both 2-year and 10-year notes extending gains after strong economic data reinforced expectations that rates could remain steady for longer. St. Louis Fed President Alberto Musalem noted that current monetary policy is appropriately positioned and likely to remain unchanged for some time.

However, the upside of the USD/CAD pair could be restrained as the Canadian Dollar (CAD) could receive support from higher oil prices, given the fact that Canada is the largest crude exporter to the United States (US).

West Texas Intermediate (WTI) oil price gains nearly 5% after two days of losses, trading around $98.90 per barrel at the time of writing. Crude oil prices rise as Trump’s latest remarks lack fresh signals on Iran, prompting cautious sentiment across energy markets.

• USD/CAD eases as the US Dollar Index falls to a one-week low.
• Improving sentiment around a potential US-Iran de-escalation weighs on the Greenback, though risks around the Strait of Hormuz persist.
• Strong US data fails to lift the USD, while Canada’s PMI signals stagnation, leaving the pair driven mainly by Dollar dynamics.

USD/CAD trades with a softer tone on Wednesday, as a pullback in the US Dollar (USD) lends support to the Canadian Dollar (CAD). The pair is trading around 1.3891 at the time of writing, retreating after touching its highest level since December 2025 earlier this week.

The US Dollar is under pressure as recent comments from US President Donald Trump suggesting the US-Iran war could end within “two or three weeks” have improved risk appetite and reduced demand for the Greenback as a safe-haven asset.

However, the situation remains far from resolved, with tensions still centered around the reopening of the Strait of Hormuz. Donald Trump said in a post on Truth Social that Iran’s leadership had requested a ceasefire, adding that Washington would consider it only if the Strait of Hormuz is “open, free and clear.” He warned that until then, the US would continue military operations.

Meanwhile, Iran pushed back on the claim, with a Foreign Ministry spokesperson saying that reports of Tehran requesting a ceasefire are false, according to Al Jazeera.

While hopes of de-escalation have pushed Oil prices lower from recent highs, they remain elevated compared to pre-conflict levels but have failed to provide meaningful support to the commodity-linked Loonie, leaving USD/CAD largely driven by US Dollar dynamics.

Meanwhile, stronger US economic data failed to provide support to the Greenback. The US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, is hovering near 99.40, close to a one-week low after touching ten-month highs of 100.64 on Monday.

The ISM Manufacturing PMI rose to 52.7 in March, beating expectations of 52.5 and improving slightly from the previous 52.4. The ADP Employment Change rose by 62K in March, beating expectations of 40K but easing from the previous reading of 66K (revised from 63K).

Retail Sales increased by 0.6% in February, surpassing forecasts of 0.5% and rebounding from a revised -0.1% decline in January (previously -0.2%).

In Canada, the S&P Global Manufacturing PMI fell to 50 in March, down from 51 in February, signaling a stagnation in manufacturing sector performance.

On the monetary policy front, St. Louis Fed President Alberto Musalem said US monetary policy is “well positioned,” adding that holding interest rates steady is likely appropriate for some time.

• USD/CAD depreciates as the commodity-linked Canadian Dollar gains on the oil prices rebound.
• Emirati officials seek UNSC approval for a multinational military action to restore Strait navigation, potentially using force.
• The US Dollar weakens as Trump indicated that the US will withdraw from Iran conflict within two to three weeks.

USD/CAD remains subdued for the second successive trading day, hovering around 1.3910 during the Asian hours on Wednesday. The pair depreciates as the commodity-linked Canadian Dollar (CAD) receives support from higher oil prices, given Canada’s status as the largest crude exporter to the United States (US).

West Texas Intermediate (WTI) oil price rebounds after registering over 4% losses in the previous day, trading around $98.60 per barrel at the time of writing. Oil prices rebound as the Emirati officials are lobbying for a United Nations Security Council (UNSC) resolution to authorize a multinational military mission to restore navigation in the strait, elevating risks of broader regional escalation.

The UAE is also urging the United States (US) and allied nations across Europe and Asia to form a coalition to clear mines, escort commercial vessels, and, if required, secure strategic positions along the waterway.

The USD/CAD pair also weakens as the US Dollar (USD) softens, weighed down by improving risk appetite amid rising hopes for Middle East peace. US President Donald Trump stated on Tuesday that the United States (US) would be “leaving very soon” from the Iran war, noting that a withdrawal could take place within two to three weeks.

Trump further emphasized that a formal agreement with Tehran is not a necessary condition for ending hostilities. On the Iranian side, President Masoud Pezeshkian expressed a willingness to de-escalate regional tensions if specific guarantees are met.

• USD/CAD rises to fresh three-month highs despite a softer US Dollar.
• Canada’s GDP signals a soft start to the year, with a modest rebound expected in February.
• US Dollar eases from multi-month highs as traders reassess risk sentiment.

USD/CAD edges higher on Tuesday, with the Canadian Dollar (CAD) extending its decline against the US Dollar (USD) for a seventh consecutive day, even as the Greenback eases. At the time of writing, the pair is trading around 1.3960, hovering near its highest level since December 2025.

The US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, is trading near 100.17, pulling back after touching fresh ten-month highs of 100.64 earlier in the day.

The pullback in the US Dollar appears largely technical, while some easing in geopolitical risk sentiment is also weighing on demand after The Wall Street Journal reported that Donald Trump is willing to end the US military campaign against Iran even if the Strait of Hormuz remains largely closed.

However, geopolitical risks remain elevated. Iran’s Islamic Revolutionary Guard Corps (IRGC) warned that it could target US companies in the region starting April 1 in retaliation for recent attacks.

The Loonie has remained under sustained pressure since the US-Israel war with Iran erupted, pushing energy prices sharply higher. While Canada is a net Oil exporter, persistent downside pressure on the CAD reflects growing concerns that elevated energy costs could weigh on domestic demand and slow broader economic growth.

Adding to the cautious tone, Canada’s January Gross Domestic Product (GDP) rose by 0.1% MoM, slightly above expectations for a flat reading, though it marked a slowdown from the previous 0.2% expansion, pointing to soft underlying economic momentum at the start of the year.

However, preliminary estimates suggest that real GDP rose by 0.2% in February, indicating a modest pickup in activity and keeping growth broadly in line with the Bank of Canada’s 1.8% projection outlined in its January Monetary Policy Report.

Meanwhile, traders are increasingly pricing in at least two Bank of Canada (BoC) rate hikes by year-end amid oil-driven inflation pressures. However, persistent labour market headwinds and contained underlying inflation suggest the Bank could remain patient, with rate hikes likely only if Oil prices stay elevated for longer.

In the United States, economic data released on Tuesday showed that JOLTS Job Openings fell to 6.882 million in February from 7.24 million in January, slightly below expectations of 6.92 million.

US Conference Board Consumer Confidence rose to 91.8 in March, beating forecasts of 87.9 and improving from 91 in February.

• USD/CAD depreciates as market sentiment improves on the US pausing attacks on Iran’s energy sector.
• The US Dollar may rebound as inflation fears curb Fed cut bets, boosting hike expectations.
• The commodity-linked CAD may face challenges amid softer oil prices.

USD/CAD halts its four-day winning streak, trading around 1.3850 during the Asian hours on Friday. The pair weakens as the US Dollar (USD) softens on decreasing risk aversion after recent remarks from US President Donald Trump.

Trump said Washington would pause attacks on Iran’s energy sector for 10 days at Tehran’s request, extending the April 6 deadline to allow more time for negotiations. However, the Wall Street Journal reported that mediators said Iran denied making such a request, underscoring fragile diplomacy and low odds of a near-term ceasefire.

The Greenback may regain its ground on rising inflation concerns, prompting traders to scale back expectations of further Federal Reserve (Fed) rate cuts and increase bets on a potential hike by year-end.

Federal Reserve (Fed) Vice Chair of Supervision Philip Jefferson said higher energy prices should have a modest impact on inflation, though a sustained shock could be more significant. Meanwhile, Fed Governor Michael Barr warned that another price shock could lift inflation expectations, reinforcing the case for the Fed to assess economic conditions before adjusting policy.

The downside in USD/CAD may be limited as the commodity-linked Canadian Dollar (CAD) could struggle amid softer oil prices. Traders remain cautious as the Pentagon considers deploying up to 10,000 additional ground troops to the Middle East to maintain strategic flexibility and deterrence if talks fail.

• USD/CAD rallies further to near 1.3830 as investors remain on edge amid Middle East conflicts.
• The Fed is unlikely to deliver any dovish monetary policy adjustment this year.
• Higher oil prices are expected to keep the Canadian Dollar broadly on the front foot.

The USD/CAD pair extends its winning streak for the fourth trading day on Thursday and jumps to near 1.3830 during the Asian trading session, the highest level seen in two months.

The Loonie pair trades firmly as the US Dollar (USD) rises amid uncertainty surrounding the war in the Middle East, which involves the United States (US), Israel, and Iran. As of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, holds onto Wednesday’s gains around 99.65.

The safe-haven demand of the US Dollar remains firm as Iran continues to push back hopes of de-escalation in Middle East conflicts, stating that it is not directly involved in negotiations with the US.

Regarding the month-long ceasefire proposal and 15-point settlement plan, Iran said that the Pakistan-delivered proposal was excessive and demanded sovereignty over the Strait of Hormuz. A senior Iranian official said talks could be held in Pakistan or Turkey if they proceed, Reuters reports.

On the domestic front, traders remain confident that the Federal Reserve (Fed) will not cut interest rates this year, as surging energy prices have de-anchored inflation expectations.

Meanwhile, the Canadian Dollar (CAD) underperforms its major currency peers, except antipodeans, as investors remain on edge amid the Middle East war. However, the broader outlook of the Loonie remains firm amid higher oil prices.

Given that Canada is a net oil exporter, higher oil prices due to an energy supply shock is a favorable situation for the Canadian Dollar.