USD/CAD remains above 1.3900 as traders adopt caution amid US government shutdown risks

• USD/CAD stays muted as the US government is nearing a funding freeze and possible shutdown.
• President Trump warned of widespread federal job losses if Congress does not pass a funding bill.
• Statistics Canada revised July GDP growth to 0.2% and reported no change in August, helping ease concerns of an economic slowdown.

USD/CAD moves little after registering losses in the previous session, trading around 1.3920 during the Asian hours on Tuesday. The pair holds steady as traders tread cautiously amid concerns that the upcoming US jobs report may not be released this week, with the government nearing a funding freeze and possible shutdown.

US President Donald Trump has warned of mass federal job cuts if Congress fails to pass a funding bill, effectively putting his own government at risk and threatening further disruptions to federal operations.

Market uncertainty increases as President Trump shared plans to impose a 100% tariff on imports of branded or patented pharmaceutical products from October 1, unless a pharmaceutical company is building a manufacturing plant in the US. Trump also unveiled tariffs of 50% on kitchen cabinets and bathroom vanities and 25% on trucks.

Statistics Canada revised July GDP growth up to 0.2% and reported flat activity in August, easing fears of an economic downturn and shifting market attention back to growth indicators.

The commodity-linked Canadian Dollar (CAD) faced challenges as the crude Oil prices fell more than 3% in the previous session after Iraq's Kurdistan region restarted Oil exports after a 2.5-year suspension, boosting supplies in an already oversupplied market. According to the new deal, Baghdad, the Kurdistan Regional Government, and international oil companies, initial flows of 180,000-190,000 barrels per day will be shipped to Turkey's Ceyhan port.