USD/CAD reverses its earlier gains on Monday as the Canadian Dollar (CAD) outperforms its major peers, while the US Dollar (USD) consolidates after mixed US business activity data. At the time of writing, the pair trades around 1.4250, easing from an intraday high of 1.4293, its highest level since April 2025.
The final S&P Global Services Purchasing Managers’ Index (PMI) was revised slightly higher to 58.8 in September from the preliminary reading of 58.7, while the Composite PMI was confirmed at 58.4. In contrast, the ISM Services PMI slipped to 54.9 from 55.4, narrowly missing the market forecast of 55.
The US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, trades around 102.20 after touching 102.53 earlier in the day, a fresh year-to-date high. The Greenback draws support from a sharp decline in the Euro (EUR) amid growing concerns over France’s public finances and political uncertainty in Spain.
Elevated US Treasury yields also support the US Dollar, even as traders scale back expectations of another Federal Reserve (Fed) interest-rate hike this month following last week’s weaker-than-expected US employment report. Markets still expect the Fed to raise borrowing costs later this year as inflation remains above the central bank’s 2% target and energy-related price pressures persist.
The benchmark 10-year US Treasury yield holds near 5.32%, close to last week’s peak of 5.34%, its highest level since 2002. However, the rise in yields is not solely driven by the monetary policy outlook. Growing concerns over the US debt burden and broader fiscal position are also pushing borrowing costs higher.
Against this backdrop, the US Dollar may struggle to extend its recent gains, although expectations of further Fed tightening could keep the downside limited in the near term.
On the Canadian side, the intraday strength appears to reflect technical buying and profit-taking after the Loonie’s prolonged weakness rather than a clear improvement in its fundamental outlook. The yield gap remains firmly in favour of the US Dollar, with the Canadian 10-year government bond yield near 3.99%, compared with around 5.32% for the equivalent US Treasury note.
Analysts at Brown Brothers Harriman note that attention will be on Canada’s September labor force survey due Friday, with the economy expected to add “just +5.0k jobs after losing -41.7k jobs in August.” They point out that the “unemployment rate is seen rising 0.1ppt to 6.5% on an unchanged participation rate of 65.0%, pointing to weak labor demand.”
Against this setting, BBH argues that “BOC rate hike pricing (100bps in the next twelve months) looks too aggressive and leaves CAD vulnerable to a dovish repricing.” They stress that “Canada's core inflation is near the banks’ 2% target and indicators point to continued excess supply in the economy,” suggesting limited justification for such an aggressive tightening path and, in turn, a potentially fragile Canadian Dollar if market expectations are scaled back.
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.41% | 0.19% | 0.11% | -0.02% | -0.31% | 0.46% | 0.31% | |
| EUR | -0.41% | -0.19% | -0.27% | -0.41% | -0.55% | -0.03% | -0.05% | |
| GBP | -0.19% | 0.19% | -0.08% | -0.22% | -0.35% | 0.15% | 0.13% | |
| JPY | -0.11% | 0.27% | 0.08% | -0.14% | -0.34% | 0.24% | 0.21% | |
| CAD | 0.02% | 0.41% | 0.22% | 0.14% | -0.19% | 0.36% | 0.33% | |
| AUD | 0.31% | 0.55% | 0.35% | 0.34% | 0.19% | 0.52% | 0.50% | |
| NZD | -0.46% | 0.03% | -0.15% | -0.24% | -0.36% | -0.52% | -0.03% | |
| CHF | -0.31% | 0.05% | -0.13% | -0.21% | -0.33% | -0.50% | 0.03% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).