Canadian Dollar Weakens Amid US Dollar Strength, Yield Gap

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

The USD/CAD pair has been rising steadily since September, with the most recent increase coming from around C$1.40 to C$1.4236 on Wednesday.

The main reason for the pressure on the loonie is the increasing gap between U.S. and Canadian yields, making dollar-denominated assets more appealing.

The U.S. dollar remains broadly supported by elevated inflation expectations and higher energy prices, keeping inflation pressures persistent.