The Canadian dollar softened toward 1.39 per US dollar, trading in a narrow range near early December lows as renewed US dollar support and weaker oil prices offset still supportive domestic fundamentals. The greenback firmed after US initial jobless claims fell sharply, reinforcing confidence in a resilient US labor market and reducing the urgency for near term Fed easing, while President Trump’s calmer tone on Iran pared the geopolitical premium in crude, pushing oil prices lower and eroding the CAD’s terms of trade support. At home, upside remains capped by softer labor dynamics, with unemployment holding near 6.8%, reinforcing the Bank of Canada’s neutral stance and limiting the scope for tighter financial conditions to underpin the currency. Even so, downside pressure remains contained, as broader fundamentals have improved modestly, with earlier gains in oil and gold and a stabilization in rate spreads continuing to provide a floor.
