Canadian Dollar Hits Historic Lows as US Dollar Strengthens

The Canadian dollar has been trading at historic lows, reaching 70 cents on the US dollar. This is close to the extreme lows seen during the COVID-19 pandemic and the tariff dispute between Canada and the US.

Initially, the weakness was attributed to Canada-specific factors such as a decline in oil prices and a recession, but it appears that the strengthening of the US dollar is the primary cause.

The Japanese yen has also been affected, reaching its lowest value against the US dollar since the early 1980s. The euro has weakened as well.

Since Kevin Warsh was confirmed as Federal Reserve Chair in May 2026, the US dollar has strengthened broadly. This has led to a widening of short-term yield spreads between the US and Canada, making it more expensive for Canadian companies to borrow in USD.