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The USD/CAD pair trades in negative territory for the fourth consecutive day near 1.3550 during the early Asian session on Wednesday. Higher crude oil prices continue to underpin the commodity-linked Canadian Dollar (CAD) against the Greenback. All eyes will be on the delayed US jobs data for January, which is due later on Wednesday.
US President Donald Trump threatened Iran with possible military attacks if Tehran does not accede to his demands on issues ranging from nuclear enrichment to ballistic missiles, per the Wall Street Journal. Persistent geopolitical risks could boost crude oil prices and provide some support to the commodity-linked Loonie. It is worth noting that Canada is a major oil-exporting country, and high crude oil prices generally have a positive impact on the CAD.
Furthermore, a shift in the Bank of Canada (BoC) monetary policy expectations might contribute to the CAD’s upside. The Unemployment Rate in Canada fell to 6.5%, the lowest since September 2024, Statistics Canada showed last week. This figure came in better than the expectations of 6.8%. This report has reduced the downside risk to Canada’s growth and policy outlook, narrowing expectations for aggressive BoC easing.
Traders will closely monitor the delayed US employment report for more hints about the US interest rate outlook. Markets expect the Nonfarm Payrolls (NFP) to show 70,000 jobs added in the US economy in January, while the Unemployment Rate is projected to remain steady at 4.4% during the same period. In case of stronger-than-expected outcomes, this could lift the US Dollar (USD) against the CAD in the near term.
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