Title: USD/CAD Declines as Canadian Dollar Gains Strength from Oil Rally; Attention Turns to Bank of Canada’s Governor Speech
Original article by FxStreet: https://www.fxstreet.com/news/usd-cad-weakens-as-oil-supports-cad-focus-shifts-to-boc-governor-speech-202511061220
The USD/CAD currency pair continued its downward movement during early trading hours on Monday, November 6, 2025, driven by bullish momentum in oil prices and general strength in the Canadian dollar. Investor focus has now shifted to an upcoming speech by Bank of Canada (BoC) Governor Tiff Macklem, which is expected to provide deeper insights into the central bank’s stance on interest rates amid persistent inflationary pressures and global economic uncertainty.
This article provides an in-depth analysis of the technical drivers, fundamental catalysts, and macroeconomic influences shaping the USD/CAD trajectory. It explores how oil price trends support the loonie, where the U.S. dollar stands in relation to broader Federal Reserve policy expectations, and what traders expect from upcoming Bank of Canada commentary.
Overview of Recent USD/CAD Performance
– The USD/CAD pair opened the week on a weaker note as the loonie found fresh bids supported by a rise in oil prices.
– The currency pair fell below the 1.3640 mark, losing nearly 0.3 percent intraday as investors repositioned ahead of central bank commentary.
– Crude oil, one of Canada’s largest exports, climbed over $82 per barrel during the Asain-European session crossover, giving upward momentum to CAD.
– The lack of strong U.S. economic data further limited demand for the greenback, as traders assess whether the Federal Reserve has finished its tightening cycle.
Oil Prices Turn Higher, Supporting the Canadian Dollar
Canada is one of the world’s largest oil exporters, and the value of its currency is highly sensitive to trends in crude oil prices. A significant rally in oil typically strengthens CAD, creating downward pressure on the USD/CAD pair.
Key oil-related developments include:
– West Texas Intermediate (WTI) crude rose toward $82.40 per barrel.
– Brent crude futures traded near the $86 mark after OPEC+ reaffirmed its production cuts, which are expected to balance the market through Q4 2025.
– Supply concerns in the Middle East and increased global demand forecasts from the International Energy Agency (IEA) supported bullish momentum.
– Recent data from the U.S. Energy Information Administration showed a larger-than-expected drop in inventories, reinforcing bullish sentiment.
– A weaker U.S. dollar boosted commodity prices broadly, with oil benefiting as a dollar-denominated asset.
With oil prices rising, sentiment around commodity-linked currencies like the Canadian dollar improved, resulting in increased demand for the loonie.
US Dollar Faces Headwinds Amid Fed Reassessment
As the Canadian dollar strengthens on commodity price gains, the U.S. dollar is seeing headwinds due to evolving expectations regarding Federal Reserve monetary policy. Last week’s data and comments by Fed officials led markets to believe the central bank is likely done with raising interest rates in this tightening cycle.
Contributing factors:
– The latest U.S. nonfarm payroll report showed a slowdown in job creation, with 150,000 new jobs added vs. the expected 180,000.
– Wage growth remained subdued at 0.2 percent month-on-month.
– The unemployment rate climbed slightly to 3.9 percent from 3.8 percent.
– Dovish commentary from Fed Chair Jerome Powell suggested a more data-dependent path ahead.
According to CME Group’s FedWatch Tool, financial markets are pricing in an over 85 percent chance that the Federal Reserve will hold interest rates unchanged at its December meeting. This has resulted in weaker demand for the U.S. dollar, contributing to the decline in USD/CAD.
Markets Await Bank of Canada Governor Tiff Macklem’s Speech
With fundamental forces already favoring the
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