Canadian Dollar Falls Below $0.71 USD Amid Rising Rate Expectations
The Canadian dollar has fallen to below $0.71 USD for the first time since July as rising interest rate expectations in the US contribute to its decline.
Karl Schamotta, chief market strategist at Corpay Inc., attributes the loonie's weakness to the strength of the US dollar, which has been on a tear over the past five days, rising 0.19% to nearly 1% against other major currencies.
The widening rate differential between Canada and the US is also putting pressure on the Canadian dollar, with the Fed's funds rate now sitting at 3.75% to 4%, compared to the Bank of Canada overnight lending rate of 2.25%.
Shaun Osborne, chief currency strategist at the Bank of Nova Scotia, notes that the fourth quarter typically presents stronger headwinds for the Canadian dollar and predicts negative returns for the loonie against the US dollar in October and November.