The USD/CAD pair has rebounded from a three-month low, but this does not change its medium-term downtrend.
2025-12-17 11:27:56
During Wednesday's Asian trading session, the USD/CAD pair rebounded from the previous day's low of 1.3730 and is currently trading around 1.3770. The short-term rebound is mainly supported by the US dollar and the Canadian dollar's performance due to restrictions imposed by the Bank of Canada's policies.
The U.S. jobs report for November showed that nonfarm payrolls increased by 64,000, slightly higher than expected, but the October data was revised significantly downward. Meanwhile, the unemployment rate rose to 4.6%, the highest level since 2021. Retail sales were flat month-over-month, indicating that consumer demand is weakening.
Overall data indicates that while the growth rate of the US labor market has slowed, it remains resilient. Market expectations for future interest rate cuts by the Federal Reserve have not been strengthened, thus providing some support for the US dollar.
Federal Reserve officials are divided on the future path of monetary policy: some officials expect only one rate cut in 2026, while others believe that no further rate cuts are needed, and market traders generally expect two rate cuts next year.
In addition, US President Trump will interview Federal Reserve Governor Christopher Waller as a candidate for the next chairman. Waller is considered one of the candidates who has put forward the most coherent logic for interest rate cuts this year, which may help to coordinate internal policy differences and have a certain guiding role in future market expectations.
Regarding the Canadian dollar, the Bank of Canada maintained its interest rate at 2.25% and stated that the policy level was "close to appropriate," dampening market expectations for further easing in the near term.
Adding to the latest Canadian inflation data, the overall CPI remained at 2.2%, and the streamlined average inflation fell to a ten-month low of 2.8%, further indicating that price pressures are returning to the central bank's target, which limits the room for further appreciation of the Canadian dollar.
Overall, the USD/CAD pair is showing a short-term pattern of fluctuating rebound, supported by both the US dollar and expectations of Canadian dollar policy, leading to a recovery from its lows.
From the daily chart, the price has rebounded from its lows, with short-term moving averages in a bearish alignment. However, momentum indicators suggest continued volatility. The 4-hour chart shows that the upward movement encountered resistance around 1.3800, and the price may fluctuate between 1.3730 and 1.3800 in the short term.
Editor's Note:
The current USD/CAD exchange rate movement reflects a tug-of-war between US dollar support and Canadian dollar policy constraints. Mixed US employment and retail data have led to market disagreement regarding future Federal Reserve rate cuts, while the Bank of Canada's decision to maintain interest rates and declining inflation are limiting further Canadian dollar strength.
The U.S. jobs report for November showed that nonfarm payrolls increased by 64,000, slightly higher than expected, but the October data was revised significantly downward. Meanwhile, the unemployment rate rose to 4.6%, the highest level since 2021. Retail sales were flat month-over-month, indicating that consumer demand is weakening.
Overall data indicates that while the growth rate of the US labor market has slowed, it remains resilient. Market expectations for future interest rate cuts by the Federal Reserve have not been strengthened, thus providing some support for the US dollar.
Federal Reserve officials are divided on the future path of monetary policy: some officials expect only one rate cut in 2026, while others believe that no further rate cuts are needed, and market traders generally expect two rate cuts next year.
In addition, US President Trump will interview Federal Reserve Governor Christopher Waller as a candidate for the next chairman. Waller is considered one of the candidates who has put forward the most coherent logic for interest rate cuts this year, which may help to coordinate internal policy differences and have a certain guiding role in future market expectations.
Regarding the Canadian dollar, the Bank of Canada maintained its interest rate at 2.25% and stated that the policy level was "close to appropriate," dampening market expectations for further easing in the near term.
Adding to the latest Canadian inflation data, the overall CPI remained at 2.2%, and the streamlined average inflation fell to a ten-month low of 2.8%, further indicating that price pressures are returning to the central bank's target, which limits the room for further appreciation of the Canadian dollar.
Overall, the USD/CAD pair is showing a short-term pattern of fluctuating rebound, supported by both the US dollar and expectations of Canadian dollar policy, leading to a recovery from its lows.
From the daily chart, the price has rebounded from its lows, with short-term moving averages in a bearish alignment. However, momentum indicators suggest continued volatility. The 4-hour chart shows that the upward movement encountered resistance around 1.3800, and the price may fluctuate between 1.3730 and 1.3800 in the short term.
Editor's Note:
The current USD/CAD exchange rate movement reflects a tug-of-war between US dollar support and Canadian dollar policy constraints. Mixed US employment and retail data have led to market disagreement regarding future Federal Reserve rate cuts, while the Bank of Canada's decision to maintain interest rates and declining inflation are limiting further Canadian dollar strength.
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