USD/CAD climbs on USMCA concerns and firmer US labour data

• USD/CAD edges higher as fresh USMCA uncertainty weighs on the Canadian Dollar.
• Upbeat US jobs data help the US Dollar stabilise after recent weakness.
• Investors now look ahead to Friday’s US CPI data.

USD/CAD edges higher on Wednesday after reports that the US is privately considering withdrawing from the US-Mexico-Canada Agreement (USMCA), weighing on the Canadian Dollar (CAD). At the time of writing, the pair trades around 1.3612, rebounding from intraday lows near 1.3500.

However, the reports have not yet been confirmed by US officials. Still, President Donald Trump’s unpredictable approach to trade and diplomacy is keeping uncertainty high around North American trade ties.

Meanwhile, a stronger-than-expected US jobs report helped stabilise the US Dollar (USD) after its recent bout of weakness, adding further pressure on the Loonie. Nonfarm Payrolls (NFP) rose by 130K in January, beating market expectations of around 70K and coming in above December’s revised 48K gain, while the Unemployment Rate edged down to 4.3% from 4.4%.

The Bureau of Labor Statistics (BLS) noted that average monthly job growth in 2025 was only 15K, underscoring how sharply hiring momentum slowed through last year and supporting the case for the Federal Reserve’s (Fed) three consecutive interest-rate cuts in 2025.

On the inflation side of the labour market, Average Hourly Earnings rose by 0.4% MoM in January, above the 0.3% forecast, while the annual pace held steady at 3.7% YoY, slightly above expectations of 3.6%.

Taken together, the data suggest the Federal Reserve (Fed) can afford to wait before cutting interest rates again, as markets continue to price around two rate cuts by the end of the year. Attention now turns toConsumer Price Index (CPI) report due on Friday for clearer signals on the timing of the first cut.

Elsewhere, Oil prices trimmed part of their earlier gains after comments from Volodymyr Zelenskyy said Ukraine is ready to meet with the US on February 17-18, with territorial issues set to be a key focus of the talks. Softer crude prices tend to weigh on the Canadian Dollar, as Canada is a major Oil exporter.