The Canadian dollar strengthened toward 1.39 per US dollar, rebounding from a one month low near 1.391 reached on January 9th amid broad US dollar softness, but upside remains capped by weaker domestic labour signals and a more challenging oil backdrop. The recent pullback in the greenback was driven by renewed concerns over Federal Reserve independence following reports of a Justice Department inquiry into Chair Powell, alongside expectations for additional Fed rate cuts after December nonfarm payrolls undershot forecasts. At home, Canada’s unemployment rate rose to 6.8% as labour force participation increased and hiring slowed, reinforcing the Bank of Canada’s assessment that policy is already sufficiently restrictive at 2.25%. Meanwhile, crude prices have failed to deliver meaningful support to Canada’s terms of trade, with WTI holding in the high 50s per barrel and heavy Canadian sour grades trading at a double digit discount, compressing export revenues and limiting CAD upside.