Loonie Hits Six-Week Low as Fed Hawkishness and Oil Prices Weaken Canadian Dollar

The Canadian dollar, also known as the loonie, hit a six-week low near $1.3990 per US dollar due to increased expectations of higher interest rates from the Federal Reserve.

This shift in interest rate expectations made US assets more attractive to investors, causing them to pull money towards the US dollar and push other currencies down.

The Canadian dollar took a double hit as oil prices fell 3.2% to around $102.43 per barrel. Lower oil prices can weaken demand for the loonie since Canada relies heavily on oil exports.

Housing starts in Canada were softer than expected, and bond yields didn't rise as much as some US yields, which kept the Canada-US rate gap from narrowing and made it harder for the loonie to regain ground quickly.