Canadian Dollar Falls Further as Oil Prices Drop and Rate Spreads Widen

The Canadian dollar continued its losing streak against the US dollar on Friday, extending its weekly decline as oil prices dropped and interest rate spreads widened further. The loonie weakened by 0.3 percent to trade at 1.4257 per US dollar, or 70.14 US cents, within a range of 1.4202 to 1.42595. Earlier in the week, the currency hit an 18-month low of 1.4263. This marked its fourth consecutive week of losses, with the greenback gaining strength against a basket of major currencies.

Analysts attributed the decline to falling oil prices and global central banks' hawkish stance on inflation. Sarah Ying, head of foreign exchange strategy at CIBC Capital Markets, noted that the US is seen as a safer bet compared to other economies, particularly Europe, where fiscal concerns are driving investors toward the dollar. US job growth slowed more than expected in September, reducing the likelihood of another interest rate hike by the Federal Reserve this month.

The Canadian 2-year yield fell further below the US equivalent, widening the gap to about 157 basis points, the largest since February 2025. Meanwhile, the US price of oil, a key Canadian export, dropped 1.6 percent to USD91.40 a barrel after the Group of Seven countries agreed to release 100 million barrels of diesel and crude oil from emergency reserves. The Canadian 10-year yield rose nearly 1 basis point to 3.940 percent but remained below Thursday's nearly three-year high of 4.042 percent.