The USD/CAD exchange rate remains stable around 1.3900, reflecting a cautious approach by traders in light of the growing uncertainty surrounding the U.S. presidential election results. Former President Trump’s remarks about potentially contesting unfavorable results have reignited concerns reminiscent of the 2020 election, amplifying market anxieties. Concurrently, the Canadian Dollar (CAD), which is often influenced by commodity prices, faces pressure from declining West Texas Intermediate (WTI) prices despite a recent uptick of over 3%.
Recent data released for October’s U.S. Nonfarm Payrolls revealed a notably lower job growth figure of just 12,000, compared to the prior month’s increase of 223,000. This weaker-than-expected employment report contributes to downward pressure on the U.S. Dollar (USD) as traders reassess their positions ahead of critical events. Polls suggest a neck-and-neck race between Trump and Vice President Kamala Harris, raising the likelihood that the final outcome may not be determined for several days after the election.
Alongside these developments, market participants are awaiting the U.S. Federal Reserve’s policy meeting scheduled for Thursday, with expectations leaning towards a modest rate cut of 25 basis points. Current indicators suggest a high probability of this cut occurring, which would further influence the currency markets.
On the Canadian side, the potential for the CAD to weaken is compounded by the Bank of Canada’s plans for further monetary easing. As the final meeting of the year approaches in December, additional rate cuts are anticipated, with speculation surrounding a potential reduction of 50 basis points. These considerations around monetary policy adjustments add a layer of complexity to the CAD’s performance against the USD, especially amid fluctuating commodity prices and evolving market sentiments.
