On the Canadian side, the latest data shows a significant weakening in trade performance at the start of 2026. In January, Canada's international merchandise trade deficit widened to CAD 3.65 billion, far exceeding the previous deficit of CAD 1.3 billion and significantly surpassing market expectations of CAD 900 million. The widening deficit was mainly due to a larger decline in exports compared to imports. Total Canadian exports fell by 4.7% in January, the largest drop since April last year, while export volumes declined by 5.8%. 6 out of 11 major export categories saw decreases. Among them, exports of motor vehicles and parts plummeted by 21.2%, hitting their lowest level since September 2021. This was attributed to both reduced production after seasonal shutdowns in Canada's auto industry and the impact of U.S. tariffs on certain motor vehicles and parts that do not comply with USMCA rules. Exports of metal and non-metallic mineral products dropped by 8%, primarily due to reduced unprocessed gold exports to the UK. However, energy exports grew by 4.1%, partially offsetting the overall export decline, as energy remains Canada's largest export category, accounting for nearly a quarter of total exports. In terms of trade partner structure, Canada's reliance on the U.S. remains evident. In January, the U.S. accounted for 68% of Canada's exports. However, Canada's exports to the U.S. fell by 3.8%, while imports from the U.S. decreased by 3.4%, narrowing Canada's trade surplus with the U.S. from CAD 5.7 billion in December 2025 to CAD 5.4 billion. Meanwhile, after reaching a historic high in December, Canada's exports to countries other than the U.S. dropped by 6.5% in January. This result, again, was mainly caused by reduced gold exports to the UK, while imports from non-U.S. countries rose by 2.1%, primarily driven by increased industrial machinery imports from Asia. Overall, Canada's total imports fell by 1.1% in January, with 7 out of 11 major import categories declining. Economists note that this widening deficit has some seasonal characteristics. In the coming months, as auto production resumes, aircraft exports rebound, and rising oil prices boost energy exports, Canada's trade conditions may improve.

The U.S. trade situation showed clear improvement at the start of the year. In January, the U.S. trade deficit shrank by 25.3% to USD 54.5 billion, primarily due to a sharp rise in exports (which hit a record high) and a slight decline in imports. Data shows U.S. exports grew by 5.5% in January, reaching USD 302.1 billion—the largest increase since October 2021. Goods exports surged by 8.1% to USD 195.5 billion, with industrial supplies and materials exports increasing by USD 9.4 billion, while non-monetary gold and precious metals were the main drivers. Capital goods exports rose by USD 5.4 billion to a record high, led by growth in computer, civil aircraft, and computer component exports. Service exports also hit a historic high of USD 106.7 billion, driven by increases in financial services, business services, and intellectual property income. Meanwhile, U.S. imports edged down 0.7% to USD 356.6 billion. Consumer goods imports fell by USD 3.3 billion, with pharmaceutical preparations seeing a notable decline; motor vehicle and parts imports dropped by USD 2.8 billion; and industrial supplies and materials imports decreased by USD 1.4 billion. However, capital goods imports rose by USD 3.4 billion to a record high, primarily due to increased imports of computers and telecommunications equipment—reflecting growing demand for AI and data center construction. Overall, the U.S. goods trade deficit narrowed to USD 81.8 billion. If this trend continues, trade may provide some support to U.S. economic growth in the first quarter. Regarding the labor market, the latest U.S. data still indicates generally stable employment but with marginal signs of weakness. For the week ending March 7, initial jobless claims in the U.S. edged down to 213,000, slightly below the market expectation of 215,000. Since the start of the year, this indicator has mostly remained between 199,000 and 232,000, suggesting low corporate layoff rates. However, previously released data shows U.S. nonfarm payrolls fell by 92,000 in February—the sixth decline since January 2025—while the unemployment rate rose from 4.3% to 4.4%. The employment drop was largely caused by severe weather, strikes in the healthcare sector, and a pullback after unusually strong January job gains. Additionally, amid uncertainty over tariff policies and trends of AI replacing certain roles, companies remain cautious about hiring. Continuing jobless claims fell to 1.85 million, but slower hiring means many job seekers are facing longer search periods.

Within a four-hour timeframe, USD/CAD exhibits an upward-opening Bollinger Band, with moving averages diverging upward, suggesting a short-term resumption of the uptrend. Prices are oscillating upward along the EMA50 and Bollinger Upper Band, while the MACD and signal lines are trading above the zero line, signaling a rebound. Resistance lies near the EMA200 and round-number levels at 1.366 and 1.37. The RSI stands at 59, indicating that investor sentiment is skewed toward buying. Daily, the Bollinger Bands are narrowing, moving averages are flattening, and a golden cross emerges again. In addition, the MACD and signal lines are trading near the zero line. If prices fail to hold the trendline, they will likely fall to the previous low; if they hold, they may challenge the EMA200 again. The RSI is at 48, indicating easing pessimism, with higher lows and limited downside room. Therefore, it is better to buy at lows.

Trading direction: Buy

Entry Price: 1.363

Target Price: 1.4

Stop Loss: 1.33

Support: 1.35/1.325/1.28

Resistance: 1.38/1.4/1.42