USD/CAD market update

Current Level: Low-1.41s (24hr range 1.4078 to 1.4124)

USD/CAD is trading at 1.4102 after a 1.4078 to 1.4124 range, down from Friday's 1.4130 close. The pair has given back roughly a quarter of Friday's 92 point advance without threatening the breakout itself, and it is still holding well above the 1.4016 to 1.4025 shelf that capped it for five sessions through last Thursday. Friday's payrolls divergence did the structural work. This morning is consolidation, and the next directional input is a data print rather than a flow story.

Market Overview:

Risk sentiment is improving this morning, with dip buyers emerging after last week's rotation out of AI and other high growth names, per CIBC. The U.S. dollar is softer to start the week and the dollar index is pulling back after Friday's post-payrolls surge, per CIBC. Treasury yields are slightly lower, with the front of the curve supported by the pullback in oil. For USD/CAD the two legs are now pulling in opposite directions for the first time since Thursday. A softer dollar is working against the pair, while lower crude and the Fed versus Bank of Canada rate gap are working for it. CIBC reads the net setup as still constructive for USD/CAD, and the price action is consistent with that: the pair is drifting rather than retracing.

Tuesday's Core CPI Is the Week's Only First-Tier Catalyst:

October CPI lands tomorrow at 8:30am ET and it is the largest single input into December rate pricing. Consensus looks for headline inflation to slow to 0.3% month over month from 0.6%, and for core to ease to 0.2% from 0.3%. CIBC's economics team agrees on the headline but expects core to hold at 0.3%, a tick above consensus. That gap is the trade. CIBC's view is that a second consecutive 0.3% core print would show inflation failing to make enough progress and would cement the case for a December Fed increase, putting renewed upward pressure on yields. A soft print is the only outcome on the table that meaningfully reprices the December meeting lower. A heavy slate of Fed speakers runs through the week and producer prices follow on Friday, where CIBC also expects a firm reading.

The AI Complex Remains the Dominant Risk Variable:

Last week's equity move was large enough to matter for currencies. The Nasdaq 100 fell 6.36% on Thursday, its worst single session since 2020, while the S&P 500 lost 4.4% in its steepest drop since April 2025 and the Philadelphia Semiconductor Index fell 12%, per Benzinga. That left the Nasdaq 100 roughly 15% below its October 6 record and down about 4.5% on the week even after Friday's rebound. Equity futures are bouncing again this morning, per CIBC citing Bloomberg. CIBC also flags company specific pressure on Nvidia, where the board has opened an independent investigation involving its chief executive, and reads the market issue as key-man risk at the centre of the AI buildout. The currency channel runs two ways and has not yet reached USD/CAD. A sharp risk-off episode normally supports the U.S. dollar outright, while a slower reappraisal of data centre investment would remove a genuine support from U.S. growth and from the flows that have backed the currency. Neither has resolved, so this stays a watch item rather than a driver.

Canadian Data/Outlook:

There are no major Canadian data releases this week. The domestic event is tomorrow's Bank of Canada Summary of Deliberations, which covers the October 28 decision to raise the policy rate to 2.50%, the Bank's first increase since July 2023. CIBC's economics team expects the minutes to read hawkish, but sees the Bank preserving enough flexibility to keep both a hike and a pause available for December. CIBC's central bank watch now puts the odds of a 25 basis point Bank of Canada increase on December 9 at 35%, with no cut priced, up from 30% in Friday's note. That is a modest recovery from Friday's repricing, which followed a third consecutive monthly decline in Canadian employment and an unemployment rate at 6.7%. The practical point for hedgers is that the Canadian leg has no scheduled catalyst between now and the December meeting other than the minutes and the November jobs report. CIBC's own read is that Canada takes a back seat this week and that U.S. rates drive the pair.

Fed Watch:

CIBC's central bank watch shows an 82% probability of a 25 basis point increase at the December 9 FOMC meeting, with no cut priced, up from 79% in Friday's note. CIBC's own rates desk describes market pricing as roughly an 80% chance of a December hike, so the table and the desk commentary are aligned this morning for the first time in several sessions. Independent same-day corroboration remains unavailable. No November reading from CME Group's FedWatch tool could be sourced this morning, and the most recent secondary coverage, dated late October, put December hike pricing in a range of roughly 85% to 94%. That is above CIBC's table rather than below it, which reverses the gap this report has been tracking, but the comparison is three weeks stale and should not be treated as live pricing. Taken together, the three readings agree on direction and bracket the level between 80% and the low 90s. CIBC's view is that only a very soft CPI surprise derails the December expectation.

Technical Picture:

Resistance: 1.4139 is Friday's high and the highest print since October 19. 1.4152 is the October 19 session high and the first level above it, with 1.4200 the next, reinforced by the September 29 high at 1.4203.
Support: 1.4078 is this morning's low. 1.4008 is Friday's low and sits directly on the 1.4016 to 1.4025 shelf that capped the pair through late October, which makes that zone the first real test on any pullback.
Outlook: The breakout is intact. Friday's range has not been given back, the pair is consolidating in the upper half of it, and the pullback so far looks like position squaring ahead of CPI rather than rejection of the move. A firm core print projects toward 1.4152 and then the 1.4200 area. A soft print puts 1.4078 and then the 1.4008 to 1.4025 zone in play, and a close back below that shelf would be the signal that Friday's move was a one day repricing rather than a trend change.

Week Ahead:

Tomorrow carries both of the week's scheduled events, and the U.S. print is the one that moves this pair. Wednesday is a bank holiday on both sides of the border, so execution windows narrow and any post-CPI move can extend on thin liquidity. There are no first-tier Canadian releases and no central bank decisions this week.

Other Notes:

• Oil is lower, with WTI falling below US$87 per barrel on renewed optimism about progress toward ending the U.S. and Iran conflict, per CIBC citing Bloomberg. The diplomatic track has been driving crude lower since early November, when WTI fell more than 5% on reports the administration favoured giving negotiations more time, per FXStreet. CIBC notes the chart has lost a key uptrend support line after failing to break higher at the start of the month, which it reads as the bears regaining control. Lower crude is a steady headwind for CAD.
• Canadian and U.S. markets both close Wednesday for Remembrance Day and Veterans Day. Clients with settlement or funding dates midweek should confirm value dates today.