Canadian Dollar Falls to One-Week Low as US Dollar Strengthens

The Canadian dollar declined against the U.S. dollar on Thursday, reaching a one-week low as investors awaited Federal Reserve commentary. The loonie was last trading at C$1.3885 per U.S. dollar, down about 0.06%. This modest decline came after a sharper drop of 0.4% on Wednesday.

The main driver of the Canadian currency's weakness was the strength of the greenback, fueled by recent U.S. data indicating elevated interest rates. The July personal consumption expenditures price index rose 3.7% year over year, while the monthly measure increased 0.2%. Additionally, second-quarter economic growth in the U.S. was confirmed at an annualized 1.5%, further solidifying expectations of a Federal Reserve rate increase.

Market participants are looking to Federal Reserve Chair Kevin Warsh's appearance at the Jackson Hole symposium for clues on policymakers' views regarding persistent inflation and borrowing costs. A relatively stronger U.S. rate outlook can increase demand for the greenback, making it more challenging for the Canadian dollar to appreciate.