Canadian Dollar Slumps to 12-Day Low Amid US Dollar Strength

The Canadian dollar hit a 12-day low against its US counterpart on Monday, due to a combination of factors. The currency weakened by 0.3% to C$1.3915 per US dollar, or 71.86 US cents, with the lowest level since September 2 at C$1.3929.

Marc Chandler, chief market strategist at Bannockburn Global Forex, attributed the Canadian dollar's decline to the strength of the US dollar, which has been encouraged by shifting expectations around Federal Reserve policy. The US dollar itself strengthened broadly, as investors turned to the safe-haven currency and bet on interest rate hikes.

Canada's Consumer Price Index rose 3% year-on-year in August, matching both the previous month's pace and economists' expectations, but keeping inflation well above the Bank of Canada's 2% target. In response, policymakers have stated their readiness to raise borrowing costs several times if inflation remains too high.