Loonie Weakens to Nine-Day Low as Rate Hike Expectations Rise

The Canadian dollar (CAD) has weakened to a nine-day low against its US counterpart as market expectations for a Federal Reserve interest rate hike next week grew stronger. The loonie was trading 0.2% lower at 1.3862 per USD, or 72.14 US cents, after touching its weakest intraday level since September 2 at 1.3883.

According to Erik Bregar, director of FX & precious metals risk management at Silver Gold Bull, the CAD's weakness stems from rising expectations for Fed rate hikes. He noted that U.S. consumer prices accelerated in August, while a key measure of underlying inflation also rose, further supporting bets for a rate increase.

The Canadian dollar was down 0.2% for the week, with its decline partly attributed to growing confidence among investors that the Federal Reserve will raise interest rates next week.