USD/CAD Exchange Rate Stability

The USD/CAD exchange rate is holding steady after a couple of days of gains, currently around 1.4010 during Asian trading hours on Monday. The pair has faced challenges as the Canadian dollar (CAD) gains strength, primarily driven by rising oil prices. It’s worth mentioning that Canada is the main crude oil supplier to the United States.

As of now, West Texas Intermediate (WTI) crude oil is priced around $61.00 per barrel. The increase in oil prices follows an announcement from OPEC+ that indicated they would halt production increases. On Sunday, they revealed plans to freeze production increases for the first quarter of 2026, which comes after a modest interest rate hike anticipated for next month.

Nevertheless, the USD/CAD could potentially recover and extend its winning streak as the US dollar (USD) finds support from the US Federal Reserve’s (FRB) decision to lower the overnight borrowing rate to between 3.75-4.0% for the second time this year. This move has tempered speculation regarding a possible interest rate cut in December.

Fed Chairman Jerome Powell indicated during a post-meeting press conference that another rate cut in December is not guaranteed. He cautioned that policymakers might adopt a wait-and-see method until the release of official data resumes. According to the CME FedWatch tool, traders are currently pricing in a 69% possibility of a rate cut in December, down from 93% a week earlier.

However, there’s a sense of caution among traders. The ongoing government shutdown raises concerns about the U.S. economy. Congress has been gridlocked over a Republican-backed funding bill, and this stalemate has stretched into its sixth week, with no clear resolution in sight.