Canadian dollar weakens against major currencies in the week ending September 18
CAD: The underdog of the week
Big picture: The Canadian dollar fell against all the top-traded currencies in our basket. The most notable move was versus the U.S. dollar, where USD/CAD surged from 1.3918 to 1.4005 (CAD down 0.6%). Loonie weakness also showed up against the euro, yen, and Swiss franc, while only holding ground against the Australian dollar.
Key drivers:
Fed rate hike: The U.S. Federal Reserve raised rates to 4.00% on September 16, intensifying the yield gap and making the greenback more attractive. Read more
Oil’s limited support: Despite Brent crude above $107, risk aversion and U.S. dollar strength offset any commodity tailwind for CAD. Read more
Canadian inflation: August inflation stuck at 3%, above target, but not enough to trigger a Bank of Canada move, leaving CAD exposed.
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