USD/CAD extends gains above 1.3850 as concerns over Canadian Oil demand persist

USD/CAD continues its winning streak for the fifth consecutive day, trading around 1.3860 during the Asian hours on Thursday. The pair appreciates as the commodity-linked Canadian Dollar (CAD) faces challenges after US President Donald Trump signaled efforts to re-establish Venezuelan crude imports, raising concerns about added supply and heightened competition for Canadian Oil demand.

However, Prime Minister Mark Carney said Canadian crude remains low risk and competitive even if Venezuelan exports rise. His office said Carney will visit China from January 13–17 as he seeks to diversify Canada’s exports away from the United States amid uncertainty over US trade policy.

Canada’s seasonally adjusted Ivey Purchasing Managers’ Index (PMI) climbed to 51.9 in December 2025 from 48.4 in November, surpassing expectations of 49.5 and signaling a return to expansion after one month of contraction. Canada's Trade Balance data for October is due on Thursday.

The US Dollar (USD) remains steady as data points to a fragile US economic backdrop ahead of Friday’s crucial jobs report, tempering market sentiment. US Nonfarm Payrolls (NFP) is expected to show job gains of 55,000 in December, down from 64,000 in November.

The Institute for Supply Management (ISM) reported on Wednesday that the US Services PMI rose to 54.4 in December from 52.6 in November. This figure came in stronger than the expectation of 52.3. The Automatic Data Processing (ADP) Employment Change showed an increase of 41,000 jobs in December, following a revised decline of 29,000 in November. The figure comes in slightly below market expectations of 47,000.