The Canadian Dollar (CAD) remains on the defensive against the US Dollar (USD) on Thursday, pressured by broad-based Greenback strength. At the time of writing, USD/CAD trades around 1.3875, hovering near its highest level since December 5.
However, the pair lacks strong follow-through buying as a rebound in Oil prices lends some support to the Loonie, given Canada’s status as a major crude exporter. West Texas Intermediate (WTI) trades around $57.22, up nearly 1.78% after coming under pressure earlier this week amid market reaction to recent US military action in Venezuela and expanding US oversight of Venezuelan Oil exports.
The US Dollar extends its advance after data released earlier in the day showed Initial Jobless Claims rose modestly to 208,000 in the week ended January 3, slightly below market expectations of 210,000 and up from the previous week’s revised reading of 200,000.
Continuing Jobless Claims increased to 1.914 million from 1.858 million, while the four-week moving average of Initial Claims eased to 211,750 from 219,000.
The main highlight came from trade data. Figures from the Bureau of Economic Analysis and the US Census Bureau showed the Goods and Services Trade deficit narrowed sharply to $29.4 billion in October, well below forecasts of $58.9 billion and down from September’s revised $48.1 billion shortfall.
Traders now look ahead to Friday’s US Nonfarm Payrolls (NFP) report. Economists forecast payrolls to rise by 60,000 in January, following a 64,000 increase in the prior month. A softer-than-expected reading would likely reinforce expectations for further Federal Reserve (Fed) easing, while a stronger print could temper rate-cut bets. Markets are currently pricing in around two Fed rate cuts this year.
In Canada, the economic calendar remains relatively light. Data released earlier showed Canada’s trade balance swung to a deficit of C$0.58 billion in October from a C$0.24 billion surplus in September, though the shortfall was smaller than market expectations for a C$1.4 billion deficit.
Attention now turns to Friday’s Canadian labour-market report. Net Change in Employment is forecast to show a modest decline of 5,000 jobs in December, following a strong 53,600 increase in November.
On the monetary policy front, markets widely expect the Bank of Canada (BoC) to keep interest rates unchanged through much of 2026.
Source: https://www.fxstreet.com/news/usd-cad-steadies-near-monthly-highs-as-markets-await-us-nfp-and-canada-jobs-data-202601081819
