Loonie Slumps as US Fed Rate Hike Widens Gap

The Canadian Dollar hit its lowest level since early August after the US Federal Reserve raised interest rates by a quarter-point to 3.75-4.00%, while Canada's Bank of Canada kept its overnight rate steady at 2.25%.

This move widened the gap between the two countries' rates from 1.375 points to 1.625, favoring the US Dollar against the Loonie.

The price of oil, typically a boost for the Canadian currency, failed to save it this time, as USD/CAD rose by 71 pips and 0.51%.

The Bank of Canada has not adjusted its rate in seven consecutive meetings and will next meet on October 28, while the Fed's projections indicate that US interest rates may reach 4.1% by December and remain there through 2027.