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The Canadian Dollar (CAD) extends its losses against the US Dollar (USD) on Monday, as renewed Greenback strength and falling Oil prices weigh on the commodity-linked Loonie. At the time of writing, USD/CAD is trading around 1.3676, up about 0.44% on the day.

Traders also digested the latest manufacturing Purchasing Managers Index (PMI) releases from both the United States (US) and Canada. In the US, the Institute for Supply Management (ISM) Manufacturing PMI rose to 52.6 in January from 47.9 in December, beating market expectations of 48.5.

The Employment Index improved to 48.1 in January from 44.9 previously. The New Orders Index jumped to 57.1 from 47.7, expanding for the first time since August and marking its strongest reading since February 2022. The Prices Paid Index rose to 59.0 in January, coming in below the 60.5 forecast but above the prior 58.5 reading.

At the same time, the S&P Global Manufacturing PMI edged higher to 52.4 from 51.9.

The upbeat data helped the Greenback extend its recovery, with the US Dollar Index (DXY), which tracks the Greenback's value against a basket of six major currencies, trading near 97.62, its highest level in about a week.

Further support comes from a more hawkish Federal Reserve (Fed) outlook after US President Donald Trump nominated former Fed Governor Kevin Warsh to succeed Fed Chair Jerome Powell when his term ends in May.

Investors view Kevin Warsh as a more institutional and policy-oriented choice than other contenders, reducing fears that monetary policy could be shaped by political pressure following Trump’s repeated demands for lower rates.

On the Canadian side, the S&P Global Manufacturing PMI rose to 50.4 in January from 48.6 previously, signalling a return to modest expansion.

Commenting on the release, Paul Smith, Economics Director at S&P Global Market Intelligence, said that “following a challenging 2025, PMI data suggested that Canada’s manufacturing sector started the new year on a more positive footing. Output stabilised after nearly a full year of continuous contraction, while confidence in the outlook improved and marginal jobs growth was recorded for the first time in 12 months.”

Meanwhile, the downside in the CAD is being reinforced by softer Oil prices, as Canada is one of the world’s largest crude exporters. West Texas Intermediate (WTI) is trading around $61.78 per barrel, down more than 5.5% on the day.

Attention now shifts to labour market releases due on Friday, with both the Nonfarm Payrolls (NFP) report and Canada’s employment figures set to steer near-term price action.

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