Loonie Hits New Lows as US Dollar Strength Persists

The Canadian dollar continued to weaken on Thursday, reaching its lowest levels in several weeks due to the strength of the U.S. dollar and a widening gap between U.S. and Canadian bond yields.

The loonie was trading around C$1.424, which is roughly 70.2 U.S. cents, according to intraday market data. This trend follows a recent weakening pattern, with USD/CAD rising to C$1.4236 on Wednesday after starting the session at C$1.4191.

The main factor behind the loonie's decline is the increasing appeal of dollar-denominated assets due to higher U.S. bond yields and expectations of persistent inflation pressures. The Canadian dollar had already fallen to a 12-week low last week as Canadian yields declined relative to U.S. rates.