CAD Tumbles to New Low Amid Widening Rate Gap with Fed

The Canadian dollar has weakened to its lowest level in over a month, hitting around 1.41 per US dollar in September. This decline is largely attributed to market expectations of a widening interest-rate differential between the US and Canada.

With the Federal Reserve continuing to tighten monetary policy, the US dollar's advantage over the Canadian dollar has been reinforced. In contrast, the Bank of Canada kept its key policy rate unchanged at 2.25% in September, failing to match the Fed's hawkish stance.

Elevated oil prices continue to exert upward pressure on Canadian inflation, but this may be offset by economic slack stemming from trade tensions with the US. Meanwhile, estimates suggest that Canadian retail sales increased 1.3% month over month in August, rebounding from a decline in July and marking the strongest gain since January.