The Canadian Dollar (CAD) held steady on Tuesday as global market activity slowed, with investors bracing for the potential US government shutdown. The uncertainty has cast doubt on the release of September’s US Nonfarm Payrolls (NFP), a key report for Federal Reserve (Fed) policy expectations, which could be delayed or canceled if the government closes.
Daily digest: CAD holds firm as US shutdown risks dominate
The Loonie hovered near key technical levels against the US Dollar as flows dried up, with traders unwilling to take fresh positions ahead of political developments in Washington. The fiscal year for the US begins October 1, and the looming funding gap is drawing investor focus.
US shutdowns rarely cause lasting market disruptions, but the length and severity of this potential closure remain a concern. President Donald Trump has warned of aggressive executive actions, including job cuts for federal workers, should the deadlock persist.
Meanwhile, Purchasing Managers Index (PMI) data for both Canada and the US are due Wednesday, though the release is expected to have limited market impact compared with the broader uncertainty around Fed policy and fiscal stability.
Canadian dollar price forecast
USD/CAD continues to consolidate after testing resistance near 1.3960. The pair has climbed back above its 200-day Exponential Moving Average (EMA) at 1.3870, highlighting recent weakness in the Canadian Dollar. For now, CAD is stuck in a holding pattern, with direction likely to hinge on developments out of Washington and the timing of the NFP release.
