CAD Falls Despite Oil Surge as Dollar Factor Takes Center Stage

The Canadian dollar weakened on September 10 despite oil prices reaching $103.98 per barrel, its highest level in nearly two weeks.

This divergence between the loonie and oil prices has raised questions about why CAD isn't rallying as it usually does when oil surges.

According to Bank of Canada research, the dollar factor accounts for roughly 11% of CAD's variation, while the oil factor only explains about 1%.

The recent US inflation surprise and jump in Treasury yields have become stronger immediate forces that are driving down the loonie.