USD/CAD Halts Four-Day Losing Streak, Holds Steady Around 1.4010
During Asian trading hours on Thursday, the USD/CAD currency pair paused its four-day losing streak, remaining relatively flat and trading near the 1.4010 level. The pair shows potential for gains as the US Dollar (USD) could strengthen further amid improving market sentiment, bolstered by the end of the United States government shutdown.
US Government Shutdown Ends
Reuters reported that US President Donald Trump signed the government funding bill on Thursday, officially ending the longest government shutdown in US history. This bill mandates the resumption of normal government operations and includes provisions for direct payments to individuals to assist with healthcare purchases.
Hawkish Fed Signals Support USD
The US Dollar may also receive support from hawkish comments by Federal Reserve officials, which have lowered the probability of a Fed rate cut in December. According to the CME FedWatch Tool, the market now prices in nearly a 60% chance of a 25-basis-point rate cut, down from 67% just one day prior.
Atlanta Fed President Raphael Bostic weighed in on economic trends at the Atlanta Economic Club on Wednesday. He cautioned that easing monetary policy too soon could “feed the inflation beast,” while also noting that a sharp downturn in the labor market is unlikely in the near term.
Canadian Dollar Faces Headwinds
On the flip side, the downside risk for USD/CAD might be limited as the Canadian Dollar (CAD) faces a cautious outlook due to the Bank of Canada’s (BoC) policy stance. Current rate market expectations suggest the BoC will keep interest rates unchanged at least through the end of 2026. However, this outlook could shift if economic conditions deteriorate.
Overall, the USD/CAD pair remains sensitive to developments in US economic policy and central bank signals on both sides of the border. Traders will closely watch further updates for clues on the next directional move.
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