Oil Price Rally Keeps USD/CAD in Tight Range

The USD/CAD pair has been trading at relatively lower levels due to high oil prices and a weak U.S. dollar performance. International oil prices have surged, with WTI crude rising to near $92 per barrel on Monday, while Brent crude approached $97.

Strong U.S. employment data released in August also supports the U.S. dollar. Non-farm payrolls increased by 162,000, exceeding market expectations of 56,000, and keeping the unemployment rate steady at 4.1%. This has led markets to raise expectations for a Federal Reserve rate hike in September, with around a 57% probability.

However, the Canadian labor market has shown relative weakness, with employment decreasing by approximately 41,700 in August. This divergence in employment data between the United States and Canada has reinforced interest rate expectations supporting the U.S. dollar.