CAD Weakens on Widening US-Canada Rate Gap
The Canadian dollar weakened slightly to around 1.41 per US dollar in September, its lowest level in more than a month, as expectations point to a widening interest-rate differential between the US and Canada. Markets expect the Federal Reserve to continue tightening while the Bank of Canada holds rates steady. The Fed raised its federal funds target range at its latest meeting, reinforcing the US dollar’s advantage over the loonie. Meanwhile, the BoC kept its key policy rate unchanged at 2.25% in September. Elevated oil prices continue to put upward pressure on Canadian inflation, although this could be offset by economic slack stemming from trade tensions with the US. Canadian retail sales likely increased 1.3% month over month in August, rebounding from a decline in July, according to estimates. This would mark the strongest gain since January and could signal resilient domestic demand.
41 per US dollar in September, its lowest level in more than a month, as expectations point to a widening interest-rate differential between the US and Canada. Markets expect the Federal Reserve to continue tightening while the Bank of Canada holds rates steady. The Fed raised its federal funds target range at its latest meeting, reinforcing the US dollar’s advantage over the loonie. 25% in September.
Elevated oil prices continue to put upward pressure on Canadian inflation, although this could be offset by economic slack stemming from trade tensions with the US. 3% month over month in August, rebounding from a decline in July, according to estimates. This would mark the strongest gain since January and could signal resilient domestic demand.