USD/CAD slips to 1.3963 as higher oil prices buoy the CAD, offsetting weaker‑than‑expected Canadian GDP data.

The Canadian dollar stayed firm on Friday, with USD/CAD hovering around 1.3963 – its lowest since mid‑September – as oil price gains outweighed disappointing domestic growth figures.

Oil price boost lifts the CAD

• WTI crude rose above $103 a barrel, the highest level since May, amid worries that the United States could resume strikes against Iran after the upcoming mid‑term elections.
• Higher crude prices benefit Canada, a major oil exporter, providing support to the CAD despite weaker economic data.

Domestic growth stalls

• Statistics Canada said GDP was flat in August, missing the 0.2% growth forecast for a second month in a row.
• Preliminary data point to a 0.1% contraction in September, leaving Q3 growth at about 0.3% quarter‑on‑quarter, or roughly 1.2% annualised, well below the Bank of Canada’s 2% target.

Policy backdrop

• The Bank of Canada lifted its policy rate by 25 basis points to 2.50% on Wednesday, its first hike since 2023, citing higher energy costs and inflation pressures.
• Bank analysts noted a hawkish tone, saying further rate increases may be needed and that headline CPI is expected to stay above 2% through Q4 2028.

What traders are watching

• Key support for USD/CAD around 1.3950 and resistance near 1.4050.
• Upcoming Canadian CPI and BoC minutes for clues on future rate moves.
• US data, especially PCE inflation and Fed commentary, as the market still prices a roughly 75% chance of a December rate hike.

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This article is compiled from international market news for information only. It is not investment advice.