The Canadian dollar (CAD) is having a tough time against the US dollar (USD), with the USD/CAD pair hitting its highest level since April 9 on Wednesday. As it stands, the pair is trading at about 1.4126, marking its fifth consecutive day of gains. This rise is largely due to the strong performance of the US dollar.
This strength has been fueled in part by the ISM Services Purchasing Managers’ Index (PMI), which bounced back from 50.0 in September to 52.4 in October. This indicates a continued expansion, the eighth of its kind in 2025. Notably, business activity saw a significant uptick, reaching 54.3, and new orders hit 56.2—its highest level since October 2024. Yet, the employment index remains troublesome, sitting at 48.2 for the fifth month in a row. On top of that, prices paid surged to 70.0, marking a three-year high and reflecting ongoing cost pressures.
ISM Chairman Steve Miller commented that while demand seems to be on the rise, uncertainties from tariffs and a recent government shutdown are still affecting employment and overall business confidence.
Further supporting the dollar’s ascent, the latest ADP employment report reveals that U.S. private payrolls increased by 42,000 in October, reversing a decline from September. This suggests that the labor market is holding up relatively well.
This data has bolstered expectations that the Federal Reserve may opt against cutting interest rates come December, contributing to a stronger dollar across various currencies. The U.S. Dollar Index (DXY), which measures the dollar’s value against a basket of six major currencies, is hovering around 100.30—its highest since May 29.
The Canadian dollar isn’t finding much support either, especially with oil prices dwindling. West Texas Intermediate (WTI) crude has dropped about 0.35% and is trading around $60 per barrel, which puts additional strain on Canada’s primary export sector.
Moreover, the Canadian dollar faces more obstacles due to escalating trade tensions with the United States. Prime Minister Mark Carney has issued an apology to President Donald Trump over an anti-tariff advertisement that led to halted trade discussions. However, reports suggest that President Trump has declined to restart these talks, leaving trade relations between the two nations in a precarious state.
