USD/CAD holds near seven-month highs as strong US data reinforce Dollar strength

• USD/CAD climbs to seven-month highs amid broad Greenback strength.
• ISM Services PMI rebounds to 52.4 in October, signaling renewed expansion in the US services sector.
• ADP data show US private payrolls up 42K, reinforcing Fed rate-hold expectations for December.

The Canadian Dollar (CAD) continues to underperform against the US Dollar (USD), with USD/CAD rallying to its highest level since April 9 on Wednesday. At the time of writing, the pair is trading around 1.4126, extending gains for the fifth consecutive day as broad-based Greenback strength keeps the Loonie under pressure.

The US Dollar got an additional boost after the ISM Services Purchasing Managers Index (PMI) rebounded to 52.4 in October from 50.0 in September, returning to expansion for the eighth time in 2025. The report showed a sharp pickup in Business Activity (54.3) and New Orders (56.2), with the latter reaching its highest level since October 2024. However, the Employment Index remained in contraction for a fifth straight month at 48.2, while Prices Paid climbed to 70.0, the highest in three years, underscoring persistent cost pressures.

ISM Chair Steve Miller noted that while demand improved, ongoing uncertainty -- partly linked to tariffs and the recent government shutdown --continues to weigh on hiring and business confidence.

Adding to the Dollar's momentum, the latest ADP Employment Change report showed that US private payrolls rose by 42,000 in October, reversing September's decline and signaling that labor-market conditions remain broadly resilient.

The data reinforced expectations that the Federal Reserve (Fed) could hold off on cutting interest rates in December, pushing the Greenback higher across major currencies. The US Dollar Index (DXY), which tracks the Greenback's value against a basket of six major peers, is trading around 100.30, its highest level since May 29.

The Canadian Dollar also struggles to find support amid softer oil prices. West Texas Intermediate (WTI) crude is trading around $60.00 per barrel, down about 0.35% on the day, adding pressure to Canada's key export sector.

The Canadian Dollar also faces additional headwinds from renewed trade tensions between the United States (US) and Canada. Canada's Prime Minister Mark Carney said he apologized to President Donald Trump over an anti-tariff advertisement that led to the suspension of trade negotiations between the two countries. However, Trump reportedly rejected the resumption of talks, keeping uncertainty high over bilateral trade relations.