Canadian Dollar hits two-week highs as US Dollar retreats
- USD/CAD slides to a two-week low as falling US Treasury yields drag the US Dollar lower.
- Strong US economic data support expectations of another Fed rate hike by December.
- The Fed-BoC interest rate differential remains a key headwind for the Loonie.
USD/CAD loses nearly 0.30% on Thursday as falling US Treasury yields weigh on the US Dollar (USD). Concerns over debt-funded AI investments drive investors away from equities and into government bonds. The Greenback weakens despite stronger-than-expected US economic data reinforcing expectations of further Federal Reserve (Fed) interest rate hikes.
At the time of writing, the pair trades around 1.4189 after touching an intraday low of 1.4169, its lowest level in two weeks.
Data released on Thursday showed that the Producer Price Index (PPI) rose 1.3% MoM and 6.3% YoY in September, exceeding forecasts of 0.5% and 5.3%, respectively. Core PPI, which excludes food and energy, increased 0.7% MoM and 5% YoY, also beating estimates of 0.3% and 4.4%.
Retail Sales increased 0.8%, above the 0.3% forecast, following an upwardly revised 1.3% rise in August. Weekly Initial Jobless Claims came in at 199K, slightly below expectations of 200K and up from 198K the previous week.
The figures follow Wednesday’s Consumer Price Index (CPI) report, which showed headline inflation accelerating to 3.7%, above the 3.6% forecast, while core inflation rose to 2.6%, exceeding expectations of 2.5%.
Together, resilient consumer spending and sticky inflation, driven partly by higher energy prices linked to the war in the Middle East, strengthen expectations of another Fed rate hike before year-end. According to the CME FedWatch Tool, traders expect a pause in October following September’s 25-basis-point hike, while pricing in around a 90% chance of another increase by December.
Against this backdrop, the US Dollar may avoid a deeper sell-off, limiting the Canadian Dollar’s recovery. The Loonie also faces a headwind from Canada’s relatively low interest rates compared with those in the United States. The Bank of Canada (BoC) has kept its policy rate unchanged at 2.25% so far this year.
The bar for a rate increase remains high, as the inflationary impact of elevated energy costs has so far been limited, with underlying inflation near the BoC’s 2% target. A weak labour market and uncertainty surrounding US trade policies also give policymakers reasons to remain cautious, although markets anticipate a rate hike by December.
Canadian Dollar Price Today
The table below shows the percentage change of Canadian Dollar (CAD) against listed major currencies today. Canadian Dollar was the strongest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.53% | -0.59% | -0.09% | -0.34% | 0.77% | -0.37% | -0.85% | |
| EUR | 0.53% | -0.07% | 0.41% | 0.16% | 1.32% | 0.13% | -0.33% | |
| GBP | 0.59% | 0.07% | 0.48% | 0.23% | 1.37% | 0.21% | -0.27% | |
| JPY | 0.09% | -0.41% | -0.48% | -0.25% | 0.89% | -0.30% | -0.76% | |
| CAD | 0.34% | -0.16% | -0.23% | 0.25% | 1.12% | -0.02% | -0.51% | |
| AUD | -0.77% | -1.32% | -1.37% | -0.89% | -1.12% | -1.14% | -1.62% | |
| NZD | 0.37% | -0.13% | -0.21% | 0.30% | 0.02% | 1.14% | -0.49% | |
| CHF | 0.85% | 0.33% | 0.27% | 0.76% | 0.51% | 1.62% | 0.49% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Canadian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent CAD (base)/USD (quote).
Nothing in this material constitutes investment advice, personal recommendation, investment research, an offer, or a solicitation to buy or sell any financial instrument. The content has been prepared without consideration of your individual investment objectives, financial situation, or needs, and should not be treated as such.
Past performance is not a reliable indicator of future performance and/or results. Forward-looking scenarios or forecasts are not a guarantee of future performance. Actual results may differ materially from those anticipated.
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