Canadian Dollar Enters Corrective Phase After Jobs Data; USD/CAD Near 1.39

03:48 PM EST, 01/09/2026 (MT Newswires) -- The Canadian dollar entered a corrective phase early in the New Year after December jobs data showed a sizable reversal of the November unemployment rate decline, with it moving back up 0.3 percentage points to 6.8%, while the labor market produced a small job gain of 8,000, RBC Capital Markets said.

USD/CAD commenced a corrective phase, with strong congestive resistance at 1.3932 expected to attract some selling interest, and the pivot for the correction at 1.3759.

RBC said a bullish trend reversal above 1.3867 on Dec. 31 was amplified by the U.S. deposing Venezuelan President Maduro on Jan. 3 and announcing plans to control the country's oil supply that pressured Western Canadian Select prices as an increased supply of Venezuelan oil would present "longer-term structural risk for oil prices in general and Canada's heavy oil export markets more specifically." USD/CAD responded by trading toward 1.3900.

The bank said the 8,000 increase in jobs resulted in the fourth consecutive monthly gain, while hours worked are tracking negative in Q4. "The net impact was largely neutral for USD/CAD, with the pair remaining close to this week's highs amidst broader-based USD strength," it added.

The December CPI report and the Q4 business and consumer surveys on Jan. 19 will serve as the next major data.

"A daily close above 50% retracement of the November-December decline at 1.3892 would uphold the bullish backdrop in USD/CAD and shift the focus up to strong congestive resistance at 1.3932. Given the significance of this area, we would expect to see some selling interest materialize here. Initial support is located at 1.3833 and 1.3806 - with a close below 1.3759 required to end the current corrective rally," George Davis, technical strategist at RBC Capital markets, said.

On rates, RBC said the central bank seems comfortable on hold at 2.25%, the bottom-end of their neutral range. Today's substantive reversal of November's unemployment rate decline leaves the labour market in reasonable shape (bank expects an improving trend in 2026), it added.

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