The USD/CAD pair moves upward, approaching the 1.3580 level during the Asian session on Thursday. In January, the US Non-Farm Payrolls increased significantly, marking the largest rise in over a year, while the Unemployment Rate saw an unexpected decline. Market participants prepare for the upcoming US January CPI inflation data, set to be released on Friday, seeking new direction.
The USD/CAD pair is experiencing slight upward movement, currently positioned around 1.3580 during the Asian trading session on Thursday. The US Dollar shows an upward movement against the Canadian Dollar following a robust employment report that exceeded expectations. Market participants will seek additional insights from the upcoming US Consumer Price Index inflation report on Friday. In January, the US economy experienced an increase of 130,000 jobs, surpassing the market consensus of 70,000, as reported on Wednesday. The Unemployment Rate decreased to 4.3% in January, down from 4.4% in December, surpassing the anticipated figure of 4.4%.
The positive report indicates that the US labor market maintained its stability at the beginning of 2026, diminishing the likelihood that the Federal Reserve will find it necessary to lower interest rates again by midyear. This, in turn, offers some backing to the Greenback relative to the CAD. Attention will be focused on the US CPI inflation data released on Friday. The headline and core CPI are anticipated to increase by 2.5% year-over-year in January.
On a monthly basis, the headline and core CPI are projected to reflect a rise of 0.3% during the same timeframe. A softer-than-expected outcome may lead to a decline in the USD in the near term. Current geopolitical risks may elevate crude oil prices and support the commodity-linked Loonie. Canada stands out as a significant player in the oil export market, and elevated crude oil prices typically exert a favorable influence on the CAD.