USD / CAD - Canadian dollar gives back some gains

- Oil rallies on Trump’s Venezuela blockade
- UK inflation numbers sink GBPUSD
- US dollar recoups some losses after mixed NFP data.

USDCAD open: 1.3783, overnight range 1.3753-1.3796, close 1.3755, WTI 56.45, Gold 4317.80

The Canadian dollar turned tail after yesterday’s US nonfarm payrolls numbers failed to confirm the need for aggressive Fed rate cuts. However, the losses are just a correction unless USDCAD breaks above 1.3810.

WTI oil spiked from yesterday’s low of 54.87 and hit 56.58 overnight before easing to 56.28 in NY. API reported a drawdown of 9.3 million barrels, which far exceeded expectations for a drawdown of 2.2 million barrels. The news was overshadowed after Trump ordered a blockade of all sanctioned oil tankers in Venezuela while declaring the government a terrorist organization.

The US dollar’s decline came to an abrupt stop after the combined October and November nonfarm payrolls release failed to deliver a clear signal of labour market deterioration. Rather than confirming accelerating weakness, the report produced patchy and unreliable results, reflecting a reduced survey response rate and elevated data distortion. As a result, it reinforced existing convictions on both sides of the rate debate without shifting expectations in any meaningful way.

The greenback extended gains in the following session, supported by a sharp rise in geopolitical tension driven by Trump’s threat of additional sanctions on Russia should Putin reject the latest ceasefire proposal.

Asian bourses closed without a clear direction, with gains in Hong Kong offset by weakness in Australia and flat trading in Japan.

As of 7:45, the UK FTSE 100 is up 1.63%, while the French CAC 40 and German DAX are flat. US equity futures are up 0.35%, Treasury yields are 4.17% and the dollar index is 98.55.

EURUSD traded erratically in a 1.1704–1.1753 range. The euro weakened initially after the US employment data and extended losses following another disappointing German Ifo survey. The business climate index slipped to 87.6 in December, highlighting rising pessimism among German firms about growth prospects into the first half of 2026.

GBPUSD in a 1.3312–1.3427 range sold off sharply after a softer-than-expected UK inflation report strengthened the case for a 25 bp Bank of England rate cut. Headline CPI declined 0.2% m/m against expectations for no change, while core inflation eased to 3.2% y/y. Despite the pullback, price action above 1.3290 suggests the move remains corrective rather than trend-defining.

USDJPY rallied in a 154.52–155.60 band after the muddled US payrolls report clouded the Fed rate outlook. Additional support came from comments by Japanese Prime Minister Takaichi, who argued for boosting economic capacity through targeted fiscal stimulus. Markets continue to anticipate a Bank of Japan rate hike at the end of the week.

AUDUSD dipped in a 0.6612–0.6636 range amid renewed US dollar demand as expectations for near-term Fed easing were pared back. Losses were partially cushioned by growing speculation that the Reserve Bank of Australia could move toward a rate hike as early as February.

There are no US or Canadian economic reports of note on tap today.