USD/CAD remains steady after two days of gains, trading around 1.4010 during the Asian hours on Monday. The pair is struggling as the Canadian Dollar (CAD) gains ground on higher oil prices. It is important to note that Canada is the largest crude exporter to the United States (US).
West Texas Intermediate (WTI) oil prices hold gains around $61.00 per barrel at the time of writing. Crude oil prices have appreciated as the Organization of the Petroleum Exporting Countries and its allies (OPEC+) signaled a pause in output increases.
On Sunday, OPEC+ announced plans to pause output increases in the first quarter (Q1) of 2026, following another modest hike scheduled for next month.
Despite this, the USD/CAD pair may regain its footing and continue its winning streak for the third consecutive session. This is supported by the US Dollar (USD) receiving a boost from dampened expectations for a December rate cut by the US Federal Reserve (Fed).
This shift in sentiment follows the Fed’s recent decision to lower its benchmark overnight borrowing rate for the second time this year, bringing it to a range of 3.75%–4.0%. Fed Chair Jerome Powell noted during the post-meeting press conference that another rate cut in December is far from certain. He also cautioned that policymakers might need to adopt a wait-and-see approach until official economic data reporting resumes.
According to the CME FedWatch Tool, Fed funds futures traders are now pricing in a 69% chance of a rate cut in December, down from 93% just a week ago.
However, traders remain cautious due to the prolonged US government shutdown, which has now entered its sixth week. The impasse has created economic uncertainty as Congress remains deadlocked over a Republican-backed funding bill, with no easy resolution in sight.
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