USD/CAD falls to near 1.3900 as Canadian Dollar gains on higher Oil prices

  • January 19, 2026
  • Posted by: EWGFX
  • Category: news
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USD/CAD weakens as higher Oil prices support the commodity-linked Canadian Dollar.
WTI price gains as China’s industrial production rose 5.2% YoY in December.
Stronger US labor market data have delayed expectations for further Fed rate cuts until June.

USD/CAD halts its four-day winning streak, trading around 1.3900 during the Asian hour on Monday. The pair depreciates as the commodity-linked Canadian Dollar (CAD) receives support from higher Oil prices, given Canada’s status as the largest crude exporter to the United States (US).

West Texas Intermediate (WTI) Oil price extends its gains for the second successive session, trading around $59.40 per barrel at the time of writing. Crude Oil prices appreciate following China’s key economic data.

Data from the National Bureau of Statistics showed that China’s industrial production rose 5.2% year-over-year YoY in December, accelerating from 4.8% in November, supported by resilient export-driven manufacturing activity. China’s GDP expanded 1.2% QoQ in Q4 2025, up from 1.1% in Q3 and above the 1.0% consensus. On a YoY basis, growth eased to 4.5% from 4.8% but exceeded expectations of 4.4%.

However, the upside in Oil prices may remain capped as easing tensions with Iran have reduced concerns over potential supply disruptions. Market anxiety subsided after US President Donald Trump signaled last week that he may delay any military action, following Iran’s pledge not to carry out executions of protesters. However, Trump warned that forceful measures could still be taken if executions resume, leaving some geopolitical risk premium priced into the market.

The USD/CAD pair may regain its ground as the US Dollar (USD) could appreciate against its major peers, as stronger US labor market data has pushed back expectations for further Federal Reserve (Fed) rate cuts until June. Fed officials have signaled little urgency to ease policy further until there is clearer evidence that inflation is sustainably moving toward the 2% target.