Canadian dollar slips further as oil weakness and rate gap persist

The Canadian dollar weakened slightly against the U.S. dollar on Monday, as early gains failed to hold. The currency, also known as the loonie, was trading around C$1.4258 per U.S. dollar by 10:02 a.m. ET, after earlier climbing to C$1.4238 before retreating. The session high reached near C$1.4294.

The loonie’s decline comes amid lower oil prices and a persistent gap between Canadian and U.S. interest rates, which continues to weigh on the commodity-linked currency. Last week, the loonie hit an 18-month low, marking its fourth consecutive week of losses, with a drop of about 0.8%.

Canada’s services sector showed further signs of weakness, contracting for a fourth straight month in September. The S&P Global Business Activity Index improved slightly to 48.3 from 46.8 but remained below the 50 threshold, indicating ongoing contraction. New business orders and export demand weakened, while input costs rose due to tariffs and geopolitical uncertainty.

Canadian equities also reflected the cautious sentiment, with the S&P/TSX Composite Index opening 0.2% lower at 35,449.39. Oil prices added to the pressure, with West Texas Intermediate (WTI) crude falling about $1.10 to roughly $90 a barrel. Meanwhile, Canadian benchmark bond yields edged higher to around 3.98%, though U.S. yields remained significantly higher.