The primary driver of USD/CAD positioning remains the widening policy-rate differential, with the Federal Reserve holding its target range at 3.75–4.00% after the September hike while the Bank of Canada maintains 2.25%. This gap, reinforced by U.S. 10-year yields near 5.3% versus roughly 4% in Canada, has lifted the pair to around 1.42 as of early October 2026 after touching 1.429. Softer Canadian employment, subdued GDP growth, and escalating U.S.-Canada trade tariffs have weighed on the loonie, offsetting support from elevated oil prices. Traders are monitoring upcoming FOMC minutes, the October 9 Canadian jobs report, and the October 28 central-bank decisions for further signals on rate paths and any trade-resolution progress that could narrow the differential later in the year.