Canadian Loonie Hits 12-Week Low Amid Stalled Growth and Strong Dollar
The Canadian dollar has weakened to its lowest level in about 12 weeks, hitting around 1.42 per US dollar in September. This decline comes as domestic growth stalls and the US dollar gains strength.
Advance estimates show real GDP increased by 0.2% in August, but this was largely due to gains in mining and quarrying and retail trade. However, oil and gas extraction declined during the same period.
The GDP results were in line with expectations, but highlighted a weaker start to the third quarter. This has reinforced expectations that the Bank of Canada will hold interest rates steady.
Meanwhile, the US dollar climbed against a basket of major currencies as markets bet on further Federal Reserve rate increases. The widening US-Canada interest-rate differential is also contributing to the greenback's advantage over the Canadian loonie.