USD/CAD Soars Above 1.4150 as Oil Gains Fail to Rescue Loonie

The Canadian dollar weakened against the US dollar on September 25, with the USD/CAD rate rising above 1.4150. This comes despite Brent crude oil prices gaining over 20% in the past month, a move that would typically support the loonie.

According to data from Wise, one US dollar was buying C$1.41525 at 07:55 UTC on September 25, marking a decline in the Canadian dollar's value against the US dollar.

The widening gap between Canada and US short-term bond yields is putting pressure on the loonie, with the two-year yield differential now standing at around 1.5 percentage points in favor of the US. This has made Canadian-dollar holdings less attractive to investors and encouraged demand for dollars instead.

Brooke Thackray noted this trend in a BNN Bloomberg opinion column, highlighting the negative impact of the widening Canada-US spread on the loonie's value.