Canadian Dollar Surges Past 72 Cents US Amid Weakening US Economy

The Canadian dollar has been rising as the US economy weakens.

After almost falling below 70 cents US in late June, the loonie rebounded by 2.6 per cent as interest rate differentials between the US and Canada shrank by 25 basis points since a July peak.

This reduction in interest rates bets for the US Federal Reserve to hike has decreased from 65 per cent at the start of the month to 30 per cent on Friday, driven by poor US economic data such as a 0.6 per cent decline in retail sales and slowing labour market.

Currency strategist Shaun Osborne at Bank of Nova Scotia said 'spread compression is a clear motivation for the Canadian dollar'.