Canadian Dollar Steadies Amid US Government Shutdown

Canadian Dollar held steady against the US Dollar (USD) on Monday as markets reacted to the ongoing US government shutdown. USD/CAD hovered near 1.3550, with traders cautious ahead of a week now missing key US economic data.

US Shutdown Halts Key Data

The US Bureau of Labor Statistics (BLS) confirmed that Friday’s Nonfarm Payrolls (NFP) report will be suspended until federal operations resume. The BLS website stated, “Updates will start again when the Federal government resumes operations.”

The partial shutdown, the longest in recent history, has now entered its third day. Lawmakers in the House are expected to vote on a Senate-passed funding package as early as Tuesday. Until a resolution is reached, official US labor data will remain unavailable.

The lack of government data has forced traders to rely on private-sector indicators, increasing volatility in the FX market. The Federal Reserve’s next policy meeting is scheduled for March, but expectations for 2026 rate cuts remain uncertain. Markets currently price in two Fed reductions, with the first likely in June.

Canadian Economic Data

The Bank of Canada (BoC) kept its benchmark overnight rate at 2.25% on January 28, citing slow near-term growth. Canadian GDP was flat in November, while manufacturing output fell 1.3% month-on-month. The BoC projects GDP growth of 1.1% in 2026 and 1.5% in 2027. Trade uncertainty and US protectionist measures continue to weigh on Canada’s economic momentum.

Market Reactions

• DXY steadied above 97.00 after President Trump nominated Kevin Warsh as Fed Chair, triggering risk-off flows.
• WTI Crude Oil dropped to $62.00 per barrel as US-Iran tensions eased, reducing support for the commodity-linked Loonie.
• USD/CAD fell back toward 1.3700 as traders awaited clarity on the shutdown and upcoming US data.

Canadian Dollar Technical Outlook

• Support levels: 1.3540 (2023 trendline & 2025 swing low), next at 1.3430 (100% Fibonacci extension), then 1.3360 (2024 low-week close)
• Resistance levels: 1.3670, backed by 2026 yearly open at 1.3725
• 50-day EMA: 1.3680, 200-day EMA: 1.3850
• RSI: low 40s, indicating potential for further downside

USD/CAD remains below both moving averages, confirming the bearish structure that has dominated since the January reversal. Price may remain range-bound in the near term due to suspended US economic data.

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