USD/CAD trades lower to near 1.4030 amid talks to end US federal shutdown

• USD/CAD faces selling pressure as the Canadian Dollar demonstrates strength.
• Upbeat Canadian labor market data might push back BoC dovish bets.
• The US Senate is expected to advance the funding bill to end the government shutdown.

The USD/CAD pair trades 0.12% lower to near 1.4030 during the Asian trading session on Monday. The Loonie pair faces selling pressure as the Canadian Dollar (CAD) broadly outperforms its peers, except antipodeans, following the release of the upbeat Canada labour market data for October on Friday.

Statistics Canada reported that the economy surprisingly created 66.6K fresh jobs, while it was expected to show a reduction in the labour force by 2.5K. In September, employers hired 60.4K fresh workers.

The Unemployment Rate also decelerated to 6.9% after staying steady in the last two months at 7.1%, which is the highest level seen since July 2021.

Signs of improving job market conditions are expected to have provided some relief to Bank of Canada (BoC) officials and would dampen market expectations of more interest rate cuts in the near term.

Meanwhile, the US Dollar (USD) trades broadly calm on hopes that the historically longest 40-day United States (US) government shutdown will end soon.

According to a Reuters report, Senators expect to vote Sunday night on advancing a House-passed bill that will be amended to combine the short-term funding measure, which would fund the government through January 2026, with a package of three full-year appropriations bills.

Such a scenario would improve the US consumer sentiment, which was impacted significantly due to the longest federal shutdown.

On Friday, the preliminary Michigan Consumer Sentiment Index came in at 50.3 in November, the lowest figure seen in three-and-a-half years. Investors expected the data to come in lower at 53.2 from the prior release of 53.6.