USD/CAD Market Update

USD/CAD Surges to 1.3609 – Wednesday, February 11, 2026

Current Level: Low-1.36s (24hr range 1.3504–1.3607)

USD/CAD is trading near 1.3609 on Wednesday morning, rallying sharply from overnight lows as the U.S. dollar strengthens following this morning's better-than-expected employment data. The pair has climbed back toward the low-1.36 handle after nonfarm payrolls exceeded forecasts, with 130,000 jobs added in January against expectations of 65,000. The unemployment rate also fell to 4.3% from a forecasted 4.4%, underscoring ongoing labor market strength and sparking a modest U.S. dollar rally across the G10 basket.

Market Overview:

Risk appetite is mixed this morning, with equity markets showing limited reaction to the employment data as traders focus on Friday's inflation report. The U.S. dollar is higher against most G10 currencies following the stronger-than-expected payrolls print. Global bond yields are marginally higher with limited movement across the curve. Precious metals are holding steady near recent levels as the employment data provides modest support for the dollar without triggering significant position adjustments. The combination of solid labor market data and ongoing trade policy uncertainty creates a complex backdrop for currency markets.

U.S. Employment Data Exceeds Expectations:

This morning's U.S. employment report showed nonfarm payrolls reaching 130,000 in January, substantially exceeding the consensus estimate of 65,000. The unemployment rate declined to 4.3% from the forecasted 4.4%, indicating continued resilience in the labor market. The stronger-than-expected figures underscore ongoing labor market strength and reduce the urgency for Federal Reserve rate cuts in the near term.

The data suggests the labor market is stabilizing rather than deteriorating, which reinforces the Federal Reserve's cautious approach to monetary policy. Current market pricing points to a resumption of interest rate cuts in July by the U.S. Federal Reserve, with a total of two cuts priced in by year-end. The employment report provides support for the Fed's patient stance, as the data indicates the economy can withstand current policy settings without significant labor market distress.

USMCA Withdrawal Speculation Adds Trade Uncertainty:

Reports indicate U.S. President Donald Trump is considering withdrawing from the USMCA agreement, which faces a scheduled review for potential extension by July 1. An unfavorable renegotiation or the absence of a renewed deal could weigh on the Canadian economy, particularly if tariffs persist. Such an outcome would likely pressure the Canadian dollar and drive USD/CAD higher.

The view remains that the U.S. is unlikely to withdraw, but the possibility remains on the table. This headline brings U.S. withdrawal front and center and, typical to Trump's negotiating tactics, is likely a strategy to extract maximum concessions in a new deal. The uncertainty surrounding the USMCA review adds to the complex backdrop for the Canadian dollar, particularly as the July 1 deadline approaches. Markets will monitor developments closely, though the immediate currency impact has been limited given the view that this represents negotiating posture rather than imminent policy action.

Gordie Howe Bridge Ownership Clarified:

The Gordie Howe International Bridge is jointly owned by Canada and the United States, Prime Minister Mark Carney clarified to President Donald Trump following threats to prevent the bridge's opening unless the U.S. secured ownership of at least one half of this asset. Although Canada's government financed the entire $6.4 billion construction cost, ownership is split with the state of Michigan. Carney characterized their discussion as positive, while Michigan Governor Gretchen Whitmer emphasized the bridge's importance for employment in her state. The clarification removes a potential source of bilateral tension, though it highlights the ongoing scrutiny of cross-border infrastructure and trade relationships.

Canadian Data/Outlook:

Canada has no major economic data releases today, with the focus remaining on broader market developments and U.S. data. The Bank of Canada is expected to remain on hold at 2.25% through the remainder of 2026, with the central bank comfortable at the bottom of the neutral range for the foreseeable future. RBC forecasts the BoC overnight rate to remain at 2.25% through all of 2026. The Canadian dollar faces headwinds from trade policy uncertainty and the potential for USMCA renegotiation, though elevated commodity prices provide some support. The light Canadian economic calendar leaves the pair vulnerable to U.S. data releases and global risk sentiment shifts.

Fed Watch:

The Federal Reserve is expected to remain on hold at its next policy meeting on March 18, with current market pricing pointing to a resumption of interest rate cuts in July. Markets are pricing in a total of two cuts by year-end following this morning's employment data, which showed continued labor market resilience. RBC forecasts the Fed funds rate upper bound to remain at 3.75% through the end of 2026. Friday's CPI report will be the next key economic release, providing January inflation data. Expectations suggest both headline and core inflation will decline year-over-year, with forecasts of 2.5% for each measure compared to December's 2.7% headline and 2.6% core readings. The inflation data will be crucial in determining whether the Fed's patient approach remains appropriate or if adjustments to the policy path are warranted.

Technical Picture:

Resistance: 1.3629 (must hold above to maintain corrective rally), 1.3728 (61.8% Fibonacci retracement and key resistance), 1.3806 (secondary resistance), 1.3836 (trendline pivot for broader downtrend)
Support: 1.3504 (24hr low and near-term support), 1.3482 (January low and key support level), 1.3420 (September 2024 low)
Outlook: Monday's close below 1.3629 signals exhaustion of the recent corrective rally, with USD/CAD holding below this level despite strong U.S. jobs data. Downside targets at 1.3504 and the January low of 1.3482 are back in focus. The strategic view remains to continue selling USD/CAD rallies, with 1.3932 marking strong resistance and the likely top of the current range. The trendline at 1.3836 serves as the pivot for the broader downtrend and stop-loss level for the bearish view.

Week Ahead:

The week ahead features Friday's U.S. CPI report as the key event, with expectations for both headline and core inflation to decline to 2.5% year-over-year from December's 2.7% headline and 2.6% core readings. The inflation data will provide crucial insight into whether price pressures are easing as the Federal Reserve hopes or remaining sticky. For USD/CAD, the immediate question is whether the pair can hold support at 1.3504 or if a sustained break below this level will open the door to deeper losses toward 1.3482. The USMCA review deadline on July 1 adds a longer-term source of uncertainty for the Canadian dollar, though markets will likely wait for more concrete developments before pricing in significant trade policy changes.

Other Notes:

• Tumbler Ridge Tragedy: Canada is reeling from one of its deadliest mass shooting incidents. Nine people lost their lives on Tuesday, with seven at a Tumbler Ridge, B.C. high school where the gunman also died by suicide, and two others at a nearby residence in the mining town of 2,400 residents. B.C. Premier David Eby remarked that such tragedies typically feel distant rather than local. Prime Minister Mark Carney abandoned his European travel plans for the Munich Security Conference, stating he is grieving with those whose lives have been changed irreversibly today.
• EUR/USD Supported by Diversification: A good portion of recent FX moves has been driven more by sentiment than hard data. The ongoing diversification away from U.S. assets has helped the euro, which remains one of the most liquid alternatives in the G10 space. Policy uncertainty in the U.S. continues to act as a headwind for the dollar, allowing EUR/USD to trade above fair value estimates near $1.18. The options market is signaling greater concern about EUR/USD continuing to rally than about it selling off, with the options curve showing a clear tilt to the right.
• GBP/USD Dollar Story Dominates: As previously reported this week, UK political uncertainty coupled with a dovish shift in Bank of England expectations have been a drag on sterling sentiment. GBP is lower across the board, with the heaviest losses against JPY and NOK. Interestingly, GBP/USD has been moving higher, reinforcing the idea that this pair is trading more as a dollar story than a reflection of UK-specific risk. GBP/EUR remains the cleaner barometer of domestic political pressure, while GBP/USD is being driven primarily by shifts in U.S. sentiment.
• Precious Metals Consolidation: Precious metals are holding steady near recent levels following the recovery from last week's historic selloff. Gold remains above $5,000 per ounce, with the stabilization suggesting Friday's move was a sharp correction rather than a trend change. The charts remain extended, though the lack of follow-through selling indicates the liquidation of leveraged positions has largely run its course.

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. Vantry Capital Inc.