USD/CAD remains stalled below the 1.3700 area despite the risk-off market
- The Dollar remains buoyed near recent highs but is failing to consolidate above 1.3700.
- Strong Canadian employment figures and higher Oil prices are supporting the Loonie.
- CPI figures from the US and Canada might boost the pair’s volatility on Tuesday.
The US Dollar features a moderately positive trend against its Canadian counterpart, with technical indicators on bullish ground and the risk-off mood supporting the safe-haven USD, but the pair remains unable to consolidate above the 1,3700 resistance area.
Trump has proposed 35% tariffs on Canada, in addition to 30% tariffs on the European Union and Mexico, which would build on the 50% tariffs on Canadian steel and aluminum announced earlier in June. These measures are likely to weigh on the Canadian economy unless a better deal is reached before the August 1 deadline.
Strong Canadian employment and higher Oil prices are supporting the CAD
On the other hand, data from Canada beat expectations last week, with the unemployment rate declining against expectations on the back of a sharp increase in net employment. These figures strengthen the view that the Bank of Canada will keep interest rates on hold after its July 30 meeting, which is providing some support for the loonie.
Furthermore, Cride prices, Canada's main export, have rallied about $2 from Friday’s lows and are 6% above the late June lows, favoured by news that the OECC+ might be about to pause its supply hikes from October. This is another source of support for the CAD.
The economic docket is light today, and investors are likely to wait and see ahead of consumer inflation figures from both the US and Canada, which are due on Tuesday. These numbers are likely to give further clues about the monetary policies of their respective central banks and might boost USD/CAD’s volatility.
Economic Indicator
Unemployment Rate
The Unemployment Rate, released by Statistics Canada, is the number of unemployed workers divided by the total civilian labor force as a percentage. It is a leading indicator for the Canadian Economy. If the rate is up, it indicates a lack of expansion within the Canadian labor market and a weakening of the Canadian economy. Generally, a decrease of the figure is seen as bullish for the Canadian Dollar (CAD), while an increase is seen as bearish.
Read more.Last release: Fri Jul 11, 2025 12:30
Frequency: Monthly
Actual: 6.9%
Consensus: 7.1%
Previous: 7%
Source: Statistics Canada
Economic Indicator
Net Change in Employment
The Net Change in Employment released by Statistics Canada is a measure of the change in the number of people in employment in Canada. Generally speaking, a rise in this indicator has positive implications for consumer spending and indicates economic growth. Therefore, a high reading is seen as bullish for the Canadian Dollar (CAD), while a low reading is seen as bearish.
Read more.Last release: Fri Jul 11, 2025 12:30
Frequency: Monthly
Actual: 83.1K
Consensus: 0K
Previous: 8.8K
Source: Statistics Canada
Canada’s labor market statistics tend to have a significant impact on the Canadian dollar, with the Employment Change figure carrying most of the weight. There is a significant correlation between the amount of people working and consumption, which impacts inflation and the Bank of Canada’s rate decisions, in turn moving the C$. Actual figures beating consensus tend to be CAD bullish, with currency markets usually reacting steadily and consistently in response to the publication.
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