Loonie Weakens Amid Oil Price Slump and Widening Yield Gap

The Canadian dollar has weakened against the U.S. dollar as oil prices retreat and the yield gap between U.S. and Canadian assets widens.

At around 8:29 a.m. ET, the loonie was trading at C$1.4085 per U.S. dollar, or about 71.00 U.S. cents, with USD/CAD up roughly 0.15% on the day.

This move continues the Canadian dollar's recent weakness, which has seen it fall to a nearly seven-week low as the gap between U.S. and Canadian government bond yields widened despite Bank of Canada Governor Tiff Macklem taking a more hawkish tone on inflation.

Oil prices have also failed to provide support for the currency, falling sharply on Tuesday due to hopes for a diplomatic easing of the conflict involving Iran and its potential impact on oil supplies.