Canadian Dollar Squeezed by Stronger US Dollar and Rising Yields

The Canadian dollar is feeling the pressure from a stronger U.S. dollar and widening yield differentials, causing it to trade near its weakest levels in several weeks.

The USD/CAD pair was trading around C$1.424 early Thursday morning, putting the loonie at roughly 70.2 U.S. cents. This move extends a recent weakening trend for the Canadian currency.

The main factor behind the pressure on the loonie is the widening gap between U.S. and Canadian bond yields, making dollar-denominated assets more attractive. The Canadian dollar had already fallen to a 12-week low last week due to declining Canadian yields relative to U.S. rates.

Oil prices are also weighing on the commodity-linked Canadian currency, remaining volatile amid geopolitical tensions and global bond yield increases.