The slumping Canadian dollar has now fallen to its lowest level in 14 months against the U.S. dollar.
The latest decline for Canada’s currency comes after the U.S. Federal Reserve signaled that it’s likely to raise interest rates later this year to combat rising inflation.
That news has sent the U.S. dollar to a one-year high and widened the gap between U.S. and Canadian bond yields, sending the loonie lower as a result.
The Canadian dollar is now trading at 70.75 U.S. cents, its weakest level vis-à-vis the greenback since April 2025.
The U.S. dollar is strengthening as traders increase their bets that the Federal Reserve will raise rather than lower interest rates.
Also exerting downward pressure on the Canadian dollar are declining oil prices and trade uncertainty as the free trade agreement with the U.S. and Mexico comes up for review.
Prices for crude oil, a key Canadian export, have dropped sharply over the past week, dropping to under $80 U.S. a barrel.
The drop in oil prices comes after the U.S. and Iran signed a peace deal that reopened the Strait of Hormuz waterway to commercial ships.
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