Canadian Dollar Recovers as US Dollar Loses Momentum
The Canadian Dollar (CAD) rebounded on Monday, recovering from earlier losses as the US Dollar (USD) eased from multi-month highs. Investors remain cautious due to rising global debt yields, which have dampened risk appetite. The USD/CAD pair settled around 1.4240 during US trading hours, after peaking at 1.4293 earlier in the day, the highest level since March 2025.
Global bond market turbulence has driven currency movements, with the USD gaining ground against the Euro (EUR) amid concerns over escalating borrowing costs in France. These fears have revived memories of the 2009 credit crisis, overshadowing the weaker-than-expected US Nonfarm Payrolls report from Friday. The disappointing jobs data has reduced expectations of another interest rate hike by the US Federal Reserve at its upcoming meeting on October 27-28.
The focus for US traders on Monday is the ISM Services PMI report, scheduled for release at 14:00 GMT. Analysts anticipate a slight moderation in September's business activity, with the index expected to dip to 55 from 55.4 in August. Additionally, the Final S&P Services PMI, which showed a strong reading of 58.7 in September, will also be closely monitored.
In Canada, economic data is sparse, with the next significant reports, Tuesday's Ivey PMI and Friday's employment figures, set to provide further clarity. The CAD has depreciated over 3% in the past month, reflecting the growing policy divergence between the Fed and the Bank of Canada (BoC). The BoC has maintained its benchmark rate at 2.25% for a year and is unlikely to raise it soon, given economic uncertainty and inflation above its 2% target.