USD/CAD Market Update

USD/CAD Market Update – Tuesday, February 03, 2026

Current Level: Mid-1.36s (24hr range 1.3647–1.3686)

USD/CAD is trading near 1.3662 on Tuesday morning, holding steady in the upper-1.36s as markets digest the Reserve Bank of Australia's hawkish rate hike and assess the impact of Friday's dramatic precious metals correction. The pair remains near weekly highs following last week's relief rally from deeply oversold conditions, though momentum has stalled as traders await clarity on U.S. labor market data. The Bureau of Labor Statistics has confirmed that the January jobs report will be delayed due to a partial government shutdown, leaving a temporary data gap and shifting attention to Canada's Labour Force Survey later this week.

Market Overview:

Risk appetite is mixed this morning, with equity markets opening slightly higher as traders brace for corporate earnings reports. The U.S. dollar is slightly lower against the G10 basket, with the Australian dollar surging following the Reserve Bank of Australia's hawkish rate hike. Global bond yields are higher with no major moves worth reporting. Precious metals are regaining ground following Friday's historic crash, with silver holding the 50-day exponential moving average, a key support level that has held since the breakout began in June 2025. Equity markets show growing divergence as software companies continue to face pressure after Anthropic released another update to its legal AI tool, increasing fears about the technology's impact on the industry.

Reserve Bank of Australia Delivers Hawkish Rate Hike:

The Reserve Bank of Australia raised interest rates by 0.25% as expected, but the message was more concerned about inflationary risks than markets had anticipated. The RBA pledged to remain data dependent but stopped short of promising a series of rate hikes while not ruling them out either. Australia remains in a unique position within the G10, with historically low unemployment and inflation above the central bank's 2% to 3% target range. The hawkish tone has pushed the Australian dollar higher, with AUD/CAD approaching parity for the first time since 2021. Markets now expect another rate hike in May as Australia becomes the first major economy to tighten monetary policy in 2026.

Precious Metals Stabilize After Historic Selloff:

Precious metals are regaining ground after Friday's dramatic selloff that followed the nomination of Kevin Warsh as the next Federal Reserve Chair. Silver has held the 50-day exponential moving average, a key support level that has provided a floor since the breakout began in June 2025. The stabilization at this technical level is encouraging for those watching the precious metals trade, as a sustained hold above the 50-day moving average would suggest Friday's move was a sharp correction rather than a trend change. Gold and silver had surged throughout 2025 on concerns about currency debasement and geopolitical uncertainty, but the Warsh nomination provided a reality check to those extreme moves.

U.S. Jobs Report Delayed by Government Shutdown:

The Bureau of Labor Statistics has confirmed that the January jobs report will be delayed due to a partial government shutdown now in its third day. Democrats continue to demand immigration reforms as part of any funding agreement to reopen the government. The package has cleared the Senate but still requires approval from the House of Representatives before it can be sent to President Trump for signature. While a resolution appears imminent, the absence of key labor market data this week leaves the dollar without fresh catalysts. The shutdown removes what would normally be this week's focal point, turning attention squarely to Canada's Labour Force Survey on Friday.

Canadian Data/Outlook:

Canada has no major economic data releases today, with the main event of the week being Friday's employment report for January. Consensus expectations point to only modest headline changes with the unemployment rate hovering near recent readings around 6.8%. A softer print would likely pressure the Canadian dollar, whereas any upside surprise could temper USD/CAD's recent bid. November GDP was flat after a decline in October, underscoring softer momentum into year end. The jobless rate being closer to 7% than 6% is indicative of slack in the Canadian economy, which should keep inflationary pressures in check and justify a Bank of Canada hold at current policy settings.

Fed Watch:

The Federal Reserve is expected to remain on hold at its next policy meeting, with markets pricing near-zero probability of a rate cut in the near term. The nomination of Kevin Warsh as the next Federal Reserve Chair has provided clarity on leadership succession, with his hawkish historical record suggesting policy will remain restrictive. Warsh backed higher rates on the eve of the Lehman Brothers collapse and consistently argued that the Fed's market interventions have gone too far, cementing his inflation-first credentials. His primary challenge will be expanding the economy amid an AI boom without reigniting inflation. The delay of the January jobs report due to the government shutdown removes a key data point that would have informed near-term policy expectations.

Technical Picture:

Resistance: 1.3686 (24hr high), 1.3770 (50-day exponential moving average), 1.3790 (Bollinger band midpoint), 1.3800 (medium-term level)
Support: 1.3647 (24hr low), 1.3540 (June-July triple bottom), 1.3494 (76.4% retracement level and key support)
Outlook: USD/CAD is trading in the mid-1.36s as the pair trades near weekly highs following the relief rally from oversold conditions. CIBC strategists maintain their upward bias in the near term, as USMCA threats and technical indicators point to a continued relief rally. A retest of the 50-day exponential moving average and Bollinger band midpoint near 1.3770 to 1.3790 is the topside target. For USD buyers, current levels represent a potential entry point, though waiting for confirmation above 1.3686 would provide more confidence. For CAD buyers, rallies toward 1.3770 to 1.3800 would represent selling opportunities.

Week Ahead:

The week ahead features a busy calendar with central bank decisions from the ECB and Bank of England on Thursday, both expected to hold policy unchanged. The RBA's hawkish rate hike today sets up an interesting contrast, as Australia becomes the first major economy to tighten in 2026 while others remain on hold. Friday's Canadian employment report takes on added importance given the delay of U.S. jobs data, as it will provide the only fresh labor market insight from North America this week. The ADP report and ISM Services data on Wednesday will offer some clues about U.S. economic momentum, though the absence of the official payrolls report leaves a significant information gap.

Other Notes:

• Software Stocks Under Pressure: Equity markets show growing divergence as software companies continue to face selling pressure after Anthropic released a new legal AI tool that can automate tasks like contract review and legal briefings. The update has increased fears about AI's impact on the industry, particularly following January's release of Anthropic's Claude Cowork tool. The S&P 500 remains in a strong bull market, but not all sectors are participating in the gains.
• U.S. Manufacturing Strength: The ISM Manufacturing PMI flipped back into expansion at 52.6 in January, the fastest pace since 2022, driven by gains in new orders and production. The report suggests that January's geopolitical turmoil did little to disrupt what now looks like a clear shift in previously stagnant manufacturing momentum. Part of the surge can be attributed to renewed tariff tensions, which prompted firms to accelerate orders to avoid any future inflationary spike.
• EUR/USD Consolidation: The euro remains under pressure from developments in the United States, bleeding against the dollar yesterday but broadly flat against the rest of G10. The 2026 French budget has been adopted after turbulent months of political instability that saw the government collapse twice. EUR/USD continues grinding lower, showing an inclination to re-enter sub-1.18 levels, with short-term fair value pointing toward the lower bands of the 1.17 zone.
• GBP/EUR Technical Break: Sterling enjoyed a return to risk-on sentiment yesterday, with the currency broadly higher across G10 except against the U.S. dollar. GBP/EUR pushed above resistance at 1.1550 and broke the 200-day moving average at 1.1560, which had held since sterling's slide against the euro in December 2024. As the Bank of England's first policy meeting of the year approaches on Thursday, with the MPC expected to keep rates unchanged, sterling buyers appear confident that near-term bearish risks from a dovish shift are limited.

Market Mood:

RSI Scale: <30 Oversold | 30-40 Risk-Off | 40-60 Neutral | 60-70 Risk-On | >70 Overbought

This commentary is provided for informational purposes only and should not be construed as investment, legal, or tax advice. Past performance is not indicative of future results. Please consult with qualified professionals before making any financial decisions. Richardson International Currency Exchange Inc. DBA Vantry Capital.