USD/CAD trades near 1.422 as of early October 2026, supported by a widening US-Canada policy rate gap with the Fed at 3.75–4.00% versus the Bank of Canada’s 2.25% target. Recent US data showing softer payrolls have tempered immediate hike odds, yet markets still price further Fed tightening later in the year, while BoC officials cite weaker domestic growth and elevated trade uncertainty as reasons to remain cautious. Escalating US tariffs on Canadian exports and retaliatory measures have weighed on CAD sentiment, offsetting support from firmer oil prices and a wider-than-expected August trade surplus. Key near-term catalysts include the October 28 BoC and Fed decisions, Canadian employment data, and FOMC minutes, with Treasury yield differentials and commodity flows continuing to drive volatility in the pair through year-end.