Canadian dollar gains as US Treasury yields fall and oil rises
ITF Team2 min read
The CAD strengthens to around 1.3970 on 11/4/2026 as US yields drop and crude oil climbs amid midterm election uncertainty.
Key takeaways
- USD/CAD slipped to about 1.3970 during Asian trading on 11/4/2026.
- US 2‑year yields fell 5 bps to 4.566% and 10‑year yields fell 6 bps to 4.90% on the same day.
- Crude oil prices rose as peace talks between the US and Iran gained traction, supporting the CAD.
- Scotiabank analysts highlighted US midterm results as the primary near‑term driver for CAD movement.
On 11/4/2026 the Canadian dollar edged higher, pulling USD/CAD down to roughly 1.3970 in Asian hours. The move came as the US dollar lost momentum and Treasury yields slipped across the curve, while rising crude oil added a commodity boost to the CAD.
Yield declines and currency reaction
US 2‑year Treasury yields dropped five basis points to 4.566% and the benchmark 10‑year slipped six basis points to 4.90%. Lower yields reduce the relative return on dollar‑denominated assets, making the greenback less attractive to carry‑seeking investors. In a pair where the USD is the base currency, a weaker dollar translates directly into a lower USD/CAD quote.
The yield slide was linked to growing uncertainty around the US midterm elections. Early returns showed Democrats holding a sizable majority in the House, prompting market participants to reassess the likelihood of aggressive fiscal or monetary tightening. With the Fed’s policy path appearing less certain, risk‑off sentiment nudged investors toward lower‑yielding safe‑haven assets, further pressuring the dollar.
Oil price rally fuels CAD strength
Crude oil prices rose as investors weighed ongoing US‑Iran peace negotiations. Qatar’s Foreign Ministry confirmed both sides were reviewing new mediator proposals, and Iranian officials hinted that Washington’s response remained unsatisfactory. Higher oil prices benefit the CAD because oil is Canada’s largest export, directly boosting the trade balance and attracting foreign inflows.
The CAD’s commodity link means that each dollar increase in oil price typically lifts the currency by a few pips. In the current session the oil rally contributed to the CAD’s outperformance, offsetting any residual downside from domestic data scarcity.
Read also: NZD/USD stalls after weak USD gains and RBNZ dovish tilt
Domestic backdrop and BoC influence
Scotiabank analysts noted that Canada’s own data calendar offers few near‑term catalysts, with the next major release being Wednesday’s trade data. Consequently, the CAD’s trajectory will be shaped more by external forces—principally US political outcomes—than by domestic fundamentals in the immediate term.
The Bank of Canada (BoC) remains a key driver of the CAD through its interest‑rate policy. Higher rates tend to support the currency by widening the yield differential versus the US dollar. Although the BoC has not announced a change this week, any future tightening would likely reinforce the CAD’s gains, especially if US yields stay subdued.
What traders should watch
Looking ahead, the US midterm results will continue to dominate sentiment. A clear Democratic majority could dampen expectations of fiscal stimulus, keeping yields low and the USD weak. Conversely, any surprise swing toward Republicans might revive expectations of higher spending and a firmer dollar.
On the commodity side, oil price movements will remain a barometer for the CAD. Any escalation in US‑Iran tensions could spike oil, further strengthening the Canadian dollar, while a de‑escalation could reverse the trend. Traders should also monitor the BoC’s upcoming policy statements for clues on rate direction.
- US 2‑yr Treasury yield: 4.566% (down 5 bps)
- US 10‑yr Treasury yield: 4.90% (down 6 bps)
- USD/CAD level: ~1.3970 (Asian session)
- Crude oil price: rising on US‑Iran peace talks
Frequently asked questions
Why did USD/CAD fall on 11/4/2026?
The pair slipped to about 1.3970 because US Treasury yields fell across the curve, making the dollar less attractive, while higher crude oil prices supported the Canadian dollar, its main export commodity.
How do US midterm elections affect the CAD?
Early midterm results showed Democrats holding a strong House majority, which reduced expectations of aggressive fiscal or monetary policy in the US. That uncertainty kept yields low, weakened the dollar and, through the yield differential, helped the CAD appreciate.
Official data sources
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This article is compiled from international market news for information only. It is not investment advice.