Loonie Weakened by Oil Price Drop and US Rate Outlook

The Canadian dollar has been under pressure in recent days due to falling oil prices and expectations of further U.S. monetary tightening.

This has led to a widening gap between U.S. and Canadian interest rates, making U.S. assets relatively more attractive.

According to Kyle Sonlin, President and Co-founder of Global Settlement Network, 'oil alone is not enough to tell you where the currency should trade' due to uncertainty around tariffs, concerns about Canadian growth, and a rate backdrop that continues to favour the US dollar.

The loonie has been weakening since early August, with USD/CAD rising from 1.3784 on September 8 to 1.4002 on September 18.