Loonie Slumps Amid Oil Surge and US Rate Hopes

The Canadian dollar, also known as the loonie, weakened on Tuesday in response to a surge in oil prices. This increase in oil prices has raised concerns about inflation and lifted U.S. Treasury yields, making the U.S. dollar more attractive.

Oil prices, particularly Brent crude, climbed above $107 a barrel due to escalating Middle East tensions. Canada is a major oil exporter and typically benefits from higher crude prices, but this time it's having an opposite effect on the loonie.

The Canadian currency was trading around C$1.3910 per U.S. dollar, near 71.9 U.S. cents, after reaching a 12-day low of C$1.3929 on Monday. This move has left the loonie vulnerable ahead of the Federal Reserve's policy decision on Wednesday.