**USD/CAD trades near 1.42–1.426 in early October 2026 after rising roughly 3.3% over the past month, driven primarily by widening monetary-policy and growth differentials.** The Federal Reserve’s September 25-basis-point hike to a 3.75–4.00% target range, combined with elevated Treasury yields and persistent inflation concerns, has supported the dollar, while the Bank of Canada remains on hold at 2.25% amid softer Canadian data, excess capacity, and tariff-related downside risks to growth. Recent weak U.S. payrolls have tempered near-term hike odds, yet the policy gap and U.S.-Canada trade tensions continue to favor USD strength. Oil-price moves provide a partial offset for the commodity-linked loonie. Key near-term catalysts include the BoC’s October 28 decision, upcoming U.S. CPI, and any further trade developments that could shift rate expectations or risk sentiment through year-end.