USD/CAD Near 1.40 as Oil Weakness and BoC Cut Odds Weigh on the Loonie

Market snapshot

USD/CAD is trading near 1.4035 after a session dominated by weaker crude prices and fresh BoC survey data showing reduced input-cost and selling-price pressures. Swap markets price roughly a 70% probability of a 25bp Bank of Canada cut at the Oct. 29 meeting, while a softer domestic outlook and lower oil receipts are weighing on the Canadian dollar. At the same time, broader USD strength and risk-off flows—supported by tentative progress in US–China trade dialogue—has provided additional backing for the greenback.

What moved the market

BoC business survey: employment, recession risk and price pressures

The BoC Q3 business survey revealed that 37% of firms plan to increase employment, yet 33% now expect a recession in the next year (up from 28%). Firms report easing input-cost and selling-price pressures, a datapoint that reinforces market pricing for earlier easing and is echoed in other central-bank narratives such as a rise in RBA cut odds. The swaps curve currently implies ~70% odds of a 25bp cut at the Oct. 29 meeting—an outcome that would typically weaken CAD vs. peers.

Oil dynamics: IEA surplus warning and demand signals

WTI has come under pressure as the IEA warned of a potential oil supply surplus, while demand signals remain mixed. Technical traders are watching WTI patterns and momentum closely; using tools like candlestick patterns can help assess near-term setups. A sustained drop in oil receipts would aggravate Canada's terms of trade and add downside risk to the loonie.

What to watch next

Key catalysts include Canadian CPI, upcoming WTI technical levels and US macro data that could lift the dollar. Traders should also monitor cross-asset cues such as DXY momentum and safe-haven flows described in DXY momentum coverage. Market participants using automated tools may consider running signals through a forex trading bot or the broader PlayOnBit platform for execution and risk management.