USD/CAD Extends Winning Streak, US-Canada Rate Gap Widens

The US dollar has been rising against the Canadian dollar for six consecutive sessions, with USD/CAD trading near 1.4150 in Asian hours on Monday.

This upward trend is partly due to expectations of a widening interest-rate gap between the United States and Canada.

The Bank of Canada's decision in September to keep its benchmark policy rate unchanged at 2.25% has reinforced these expectations, supporting the US dollar relative to the Canadian dollar.

Strategists at Scotiabank caution that the recent weakness in the Canadian dollar may have gone too far and that there is limited scope for further tightening in Fed expectations while the BoC feels somewhat underpriced.