Canadian Loonie Faces Second Straight Weekly Loss

The Canadian Dollar is facing its second consecutive weekly decline despite a slight pullback in the US Dollar. The USD/CAD pair remains near mid-July levels, and traders are looking ahead to key economic data releases next week.

The Loonie's weakness comes despite elevated oil prices, which have historically supported the Canadian currency. However, the interest rate differential between Canada and the US continues to favor the Greenback, with the two-year US Treasury yield trading around 4.87% compared to Canada's 3.35%.

The Bank of Canada has adopted a more cautious stance, keeping its policy rate at 2.25%, while the Federal Reserve raised interest rates by 25 basis points last week. The prospect of additional Fed hikes is widening the front-end yield differential in favor of the US Dollar.