• USD/CAD rises on Tuesday, supported by progress in the US Congress toward ending the shutdown.
• The Senate’s approval of a funding bill boosts the US Dollar.
• Strong Canadian labor market data limits the Greenback’s upside potential.

USD/CAD advances toward 1.4030 on Tuesday at the time of writing, up 0.10% for the day. The move reflects growing optimism over an imminent resolution of the US government funding deadlock, while investors await fresh US employment data.

The US Senate has passed a funding bill that could bring an end to the longest federal shutdown in history within days. The text now heads to the House of Representatives for final approval before being signed into law by US President Donald Trump, who has voiced support for the bipartisan deal. This prospect reinforces confidence in the resumption of government operations and supports theUS Dollar (USD).

On the monetary front, Federal Reserve (Fed) officials maintain a dovish stance. Governor Stephen Miran noted that disinflation continues and suggested another 25 to 50 basis points rate cut could come in December. This outlook, however, caps USD upside as markets price in a 62% chance of further easing at the next meeting, according to the CME FedWatch tool.

In Canada, a resilient labor market allows the Bank of Canada (BoC) to keep its policy rate unchanged at 2.25%. The Unemployment Rate fell to 6.9% in October from 7.1% previously, while the economy added 66,600 jobs, marking a second consecutive month of stronger-than-expected gains. According to Leslie Preston, Senior Economist at Toronto-Dominion Bank, this data “will make the BoC more comfortable sitting on the sidelines and letting past rate cuts work their way through the economy.”

In the short term, the pair’s direction will depend on the final passage of the US funding bill and the market’s reaction to upcoming US labor indicators. Any confirmation that the shutdown is ending could keep USD/CAD above the psychological 1.4000 level, while Canada’s solid labor market may limit the pair’s upward momentum.