The anticipated return of Venezuelan crude oil to the Canadian dollar has impacted the currency, causing the USD/CAD exchange rate to rise continuously, awaiting further acceleration.
2026-01-08 13:33:50
The US dollar continued its upward trend against the Canadian dollar (USD/CAD) during Thursday's Asian trading session, rising for the fifth consecutive day and trading around 1.3860.
The main factor driving the exchange rate upward was the market's reassessment of changes in the crude oil supply landscape. US President Trump signaled a push to resume imports of Venezuelan crude oil, triggering investor concerns about increased global crude oil supply and more intense competition for Canadian oil demand, thus putting significant pressure on the Canadian dollar.
As a typical commodity currency, the Canadian dollar is highly sensitive to oil prices and supply and demand expectations. In the short term, market sentiment is more inclined to avoid the risks associated with the Canadian dollar in the face of potential new supply shocks.
However, Canada has also signaled a relatively stable policy stance. Canadian Prime Minister Mark Carney stated that even if Venezuelan oil exports rebound, Canadian oil remains low-risk and highly competitive.
Meanwhile, his office revealed that Carney will visit Asian countries from January 13 to 17 to promote the diversification of Canadian exports and reduce dependence on the US market, which has eased market concerns about the medium- to long-term outlook for the Canadian dollar to some extent.
On the economic data front, the latest Ivey Purchasing Managers' Index (PMI) released by Canada shows that the index rose to 51.9 in December, a significant rebound from 48.4 in November and higher than the market expectation of 49.5, returning to the expansion range and indicating that business activity has improved.
The market is also focused on the upcoming Canadian October trade balance data to further assess changes in external demand. As for the US dollar, its overall trend has been relatively stable. Although US economic data showed some resilience, weak employment-related indicators have kept the market cautious ahead of key data releases.
The market expects U.S. nonfarm payrolls to increase by 55,000 in December, down from 64,000 in November, which limits the room for further dollar appreciation.
Specifically, the US ISM Services PMI rose to 54.4 in December, significantly better than the previous value and expectations, indicating that the service sector remains resilient; while ADP employment data showed that private sector jobs increased by 41,000 in December, slightly lower than market expectations, reflecting that the cooling trend in the labor market continues.
From the daily chart, the USD/CAD pair continues its upward trend with fluctuations, and the price is steadily trading above the main short-term and medium-term moving averages, indicating that the bullish trend is dominant.
The recent consecutive positive closes indicate that buying momentum remains strong. Technically, the RSI is above 50 and continues to rise, yet has not entered overbought territory, suggesting that upside potential has not yet been fully realized.
The upside resistance level to watch is the 1.3900-1.3950 range. A successful break above this level could open up further upside potential. Initial support is around 1.3750. A break below this level could signal the end of the short-term uptrend.
Editor's Note:
Overall, the continued strengthening of the US dollar against the Canadian dollar reflects the market's rapid pricing of changes in expectations regarding crude oil supply. Until the expectation of Venezuelan crude oil returning to the market is disproven, the Canadian dollar sentiment remains cautious.
Despite signs of improvement in Canadian economic data, it is unlikely to fully offset the pressure from external energy factors in the short term. If US non-farm payroll data continues to weaken, the dollar's rise may slow, but the probability of the USD/CAD pair maintaining a high level of fluctuation with a slightly upward bias remains high until the uncertainty surrounding crude oil prices is resolved.
The main factor driving the exchange rate upward was the market's reassessment of changes in the crude oil supply landscape. US President Trump signaled a push to resume imports of Venezuelan crude oil, triggering investor concerns about increased global crude oil supply and more intense competition for Canadian oil demand, thus putting significant pressure on the Canadian dollar.
As a typical commodity currency, the Canadian dollar is highly sensitive to oil prices and supply and demand expectations. In the short term, market sentiment is more inclined to avoid the risks associated with the Canadian dollar in the face of potential new supply shocks.
However, Canada has also signaled a relatively stable policy stance. Canadian Prime Minister Mark Carney stated that even if Venezuelan oil exports rebound, Canadian oil remains low-risk and highly competitive.Meanwhile, his office revealed that Carney will visit Asian countries from January 13 to 17 to promote the diversification of Canadian exports and reduce dependence on the US market, which has eased market concerns about the medium- to long-term outlook for the Canadian dollar to some extent.
On the economic data front, the latest Ivey Purchasing Managers' Index (PMI) released by Canada shows that the index rose to 51.9 in December, a significant rebound from 48.4 in November and higher than the market expectation of 49.5, returning to the expansion range and indicating that business activity has improved.
The market is also focused on the upcoming Canadian October trade balance data to further assess changes in external demand. As for the US dollar, its overall trend has been relatively stable. Although US economic data showed some resilience, weak employment-related indicators have kept the market cautious ahead of key data releases.
The market expects U.S. nonfarm payrolls to increase by 55,000 in December, down from 64,000 in November, which limits the room for further dollar appreciation.
Specifically, the US ISM Services PMI rose to 54.4 in December, significantly better than the previous value and expectations, indicating that the service sector remains resilient; while ADP employment data showed that private sector jobs increased by 41,000 in December, slightly lower than market expectations, reflecting that the cooling trend in the labor market continues.
From the daily chart, the USD/CAD pair continues its upward trend with fluctuations, and the price is steadily trading above the main short-term and medium-term moving averages, indicating that the bullish trend is dominant.
The recent consecutive positive closes indicate that buying momentum remains strong. Technically, the RSI is above 50 and continues to rise, yet has not entered overbought territory, suggesting that upside potential has not yet been fully realized.
The upside resistance level to watch is the 1.3900-1.3950 range. A successful break above this level could open up further upside potential. Initial support is around 1.3750. A break below this level could signal the end of the short-term uptrend.
Editor's Note:
Overall, the continued strengthening of the US dollar against the Canadian dollar reflects the market's rapid pricing of changes in expectations regarding crude oil supply. Until the expectation of Venezuelan crude oil returning to the market is disproven, the Canadian dollar sentiment remains cautious.
Despite signs of improvement in Canadian economic data, it is unlikely to fully offset the pressure from external energy factors in the short term. If US non-farm payroll data continues to weaken, the dollar's rise may slow, but the probability of the USD/CAD pair maintaining a high level of fluctuation with a slightly upward bias remains high until the uncertainty surrounding crude oil prices is resolved.
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- The market involves risk, and trading may not be suitable for all investors. This article is for reference only and does not constitute personal investment advice, nor does it take into account certain users’ specific investment objectives, financial situation, or other needs. Any investment decisions made based on this information are at your own risk.
