USD/CAD holds gains above 1.4000 as US government shutdown nears end

• USD/CAD appreciates as the US Dollar gains on optimism of ending the US government shutdown.
• Weaker-than-expected ADP employment data have strengthened expectations for Fed policy easing.
• The Canadian Dollar rose amid cautious sentiment on the BoC policy outlook.

USD/CAD edges higher after three days of losses, trading around 1.4010 during the Asian hours on Wednesday. The pair appreciates as the US Dollar (USD) gains support from the ongoing process to reopen the United States (US) government. Traders will likely observe the upcoming speeches from Federal Reserve (Fed) officials, including Christopher Waller, Raphael Bostic, and Stephen Miran, later in the day.

The US Senate completed its job and passed the bill that would end the government shutdown. The House will vote on the bill on Wednesday, sending it to US President Donald Trump for signature. That would reopen the government, sending paychecks and unleashing economic data releases.

US President Donald Trump, on Monday, backed a bipartisan deal to end the US government shutdown, signaling a likely reopening within days. Senate Majority Leader John Thune said he expects Trump to sign the bill once Congress passes it.

However, the Greenback faced challenges as weaker-than-expected Automatic Data Processing (ADP), on Tuesday, employment data reinforced expectations of policy easing. The CME FedWatch Tool shows markets pricing in a 68% chance of a 25-basis-point rate cut in December.

Private employers shed an average of 11,250 jobs per week on average in the four weeks ended October 25, compared with 14,250 previously. The report suggested the labor market slowed in the second half of October, compared with earlier in the month.

The USD/CAD pair faced challenges as the Canadian Dollar (CAD) advanced on increasing cautious sentiment surrounding the Bank of Canada (BoC) policy outlook, driven by last week's stronger-than-expected labor market data.

Additionally, the commodity-linked CAD received support from higher crude prices, given the status of Canada is the largest Oil exporter to the United States (US). West Texas Intermediate (WTI) Oil price steadies after three days of gains, trading around $60.80 per barrel at the time of writing.

Organization of the Petroleum Exporting Countries and its allies, popularly known as OPEC+, is scheduled to publish its monthly market report later in the day, followed by the International Energy Agency's annual energy outlook. Both reports are expected to provide insights into forecasts through 2026 amid persistent concerns about oversupply.