The USD/CAD exchange rate was little changed during Asian trading on Tuesday, stabilizing near the 1.3750–1.3760 level. The pair paused after modest gains over the previous two sessions, as the US Dollar weakened amid easing geopolitical concerns and softer economic signals from the United States.
Market sentiment improved as tensions between the United States and Venezuela appeared to de-escalate, reducing fears of a wider regional conflict. The situation follows a US military strike on Venezuela over the weekend, after which US President Donald Trump announced that Venezuelan President Nicolás Maduro and his wife had been captured and removed from the country. On Monday, Maduro entered a not-guilty plea in a US-led narco-terrorism case, marking the start of a potentially prolonged legal process with significant geopolitical implications.
Economic data added further pressure to the US Dollar. The Institute for Supply Management’s Manufacturing Purchasing Managers’ Index showed continued contraction in the sector, falling to 47.9 in December 2025 from 48.2 in November. This marked the third consecutive monthly decline and the lowest reading since October 2024, reflecting weaker production and inventory levels. The Employment Index edged up slightly to 44.9 from 44.0, while the Prices Paid Index, a key inflation gauge, held steady at 58.5.
Attention now turns to upcoming US labor market data, particularly the December Nonfarm Payrolls report. Markets are pricing in a relatively modest increase of around 55,000 jobs, with the figures expected to provide further clarity on the Federal Reserve’s near-term policy outlook.
Meanwhile, the Canadian Dollar faces mounting pressure from shifting oil market dynamics. As a commodity-linked currency, the CAD is sensitive to changes in crude prices, and renewed US access to Venezuelan oil supplies has raised concerns about reduced demand for Canadian crude. Expectations of higher Venezuelan output, combined with a subdued initial market reaction, have cast doubt on the near-term stability of oil prices.
With global oil supply remaining ample and demand growth projections for 2026 muted, uncertainty surrounding crude prices has increased. This environment poses additional risks for the Canadian Dollar, as sustained weakness in oil prices could undermine one of Canada’s key sources of export revenue and currency support.
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