The widening US-Canada policy rate differential remains the dominant driver of USD/CAD positioning, with the Federal Reserve holding its target range at 3.75–4.00% after the September hike while the Bank of Canada maintains its overnight rate at 2.25%. This gap has lifted the two-year yield spread above 130 basis points, supporting USD strength as 10-year Treasury yields hover near 5.32% versus roughly 3.95% for Canadian bonds. Recent soft US nonfarm payrolls have tempered October hike odds to around 23%, yet the broader monetary-policy divergence and resilient US growth continue to outweigh CAD support from elevated oil prices. Canadian employment data due October 9, the Bank of Canada’s October 28 decision, and the Federal Reserve’s subsequent meeting represent key near-term catalysts that could shift implied probabilities for the pair’s path through year-end 2026.