Loonie Takes a Hit as USD Surges Ahead of Bank of Canada Decision

The Canadian dollar weakened against its U.S. counterpart on Wednesday, driven by a strengthening greenback and anticipation of the Bank of Canada's interest-rate decision later in the morning.

At around 9:30 AM ET, the USDCAD pair was trading at C$1.3933 per U.S. dollar, up 0.27% on the day, with the Canadian dollar hovering around 71.77 U.S. cents.

The move extends the loonie's recent weakness, coming after investors increased bets that the Federal Reserve could raise interest rates this month, which pushed the currency down by 0.4% to C$1.3905 per U.S. dollar on Tuesday.

Markets are widely expecting the Bank of Canada to keep its benchmark rate at 2.25%, but the central bank's tone and stance on inflation and growth will be crucial in determining the loonie's direction.