Canada's Loonie Tumbles as Interest Rate Gap Widens
The Canadian dollar has been declining due to its weakness against other currencies, particularly the US dollar. The interest-rate differential between the two countries is a key driver of this trend, with the US-Canada spread at 175 basis points.
This widening gap has made the Canadian dollar less attractive to investors, leading to a decline in its value. Additionally, trade tensions between the US and Canada have further exacerbated the situation, offsetting the potential support from rising oil prices.
The Federal Reserve's recent rate hike has also contributed to the strengthening of the US dollar, which has put pressure on the Canadian currency. Despite this, market consensus expects the loonie to remain under pressure in the near term.