USD/CAD remains steady as traders adopt caution due to increased uncertainty surrounding the US election results. Former President Trump indicated that he may challenge any unfavorable election result, as he did in 2020. The commodity-linked CAD may struggle due to cooling WTI price, despite a more than 3% increase on Monday.
Other factors include market sentiment – whether investors are taking on more risky assets or seeking safe-havens – with risk-on being CAD-positive. As its largest trading partner, the health of the US economy is also a key factor influencing the Canadian Dollar. How do the decisions of the Bank of Canada impact the Canadian Dollar? The Bank of Canada has a significant influence on the Canadian Dollar by setting the level of interest rates that banks can lend to one another.