The Canadian dollar fell to its weakest level since mid-May on Thursday, pressured by a sharp drop in oil prices and growing uncertainty surrounding the renewal of the U.S.-Mexico-Canada Agreement (USMCA). The loonie declined 0.2%, trading at 1.3960 per U.S. dollar, or 71.63 U.S. cents, after hitting an intraday low of 1.3986.<\/p>\n\n\n\n
Oil, one of Canada\u2019s top exports, closed 2.1% lower at $60.48 per barrel. The decline came as traders grew anxious about a potential oversupply ahead of the upcoming OPEC+ meeting. The market reaction was swift, with analysts pointing to the Canadian dollar\u2019s sensitivity to energy prices. \u201cIt\u2019s no surprise the Canadian dollar has broken down on the same day as oil,\u201d said Adam Button, chief currency analyst at investingLive.<\/p>\n\n\n\n
In addition to oil volatility, traders are bracing for potential turbulence around the 2026 USMCA review. Although the agreement has protected Canada from U.S. tariffs on many exports, recent developments suggest a rocky road ahead. Public consultations on the pact have already begun in all three member countries.<\/p>\n\n\n\n
“The market is finally waking up to the risk around USMCA,” Button noted. “It\u2019s impossible to imagine a smooth USMCA negotiation.\u201d These concerns have fueled investor caution and contributed to the loonie\u2019s weakness, particularly as political tensions rise ahead of formal negotiations.<\/p>\n\n\n\n
While a Reuters poll indicated that the Canadian dollar could strengthen over the next year due to anticipated Federal Reserve interest rate cuts, the uncertain future of USMCA poses a downside risk. Any disruption in trade relations with the U.S. \u2014 Canada\u2019s largest trading partner \u2014 could undermine the loonie\u2019s recovery.<\/p>\n\n\n\n
Meanwhile, the Bank of Canada is re-evaluating how it measures core inflation to better assess the effects of external shocks on the economy. Deputy Governor Rhys Mendes stated the central bank is considering changes to improve its understanding of macroeconomic trends.<\/p>\n\n\n\n
Amid the broader market volatility, Canadian government bond yields edged lower across the curve. The benchmark 10-year bond yield dropped 1.8 basis points to 3.167%. Investors are closely monitoring macroeconomic signals and central bank commentary for clues on future monetary policy shifts.<\/p>\n\n\n\n
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Loonie Hits Four-Month Low Amid Oil Slide The Canadian dollar fell to its weakest level since mid-May on Thursday, pressured by a sharp drop in oil prices and growing uncertainty surrounding the renewal of the U.S.-Mexico-Canada Agreement (USMCA). The loonie declined 0.2%, trading at 1.3960 per U.S. dollar, or 71.63 U.S. cents, after hitting an […]<\/p>\n","protected":false},"author":10772,"featured_media":13003,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8],"tags":[2917,735,2916,289,2919,2918,638,138,1697,802],"class_list":{"0":"post-13002","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-finance","8":"tag-bank-of-canada","9":"tag-bond-yields","10":"tag-canadian-dollar","11":"tag-federal-reserve","12":"tag-inflation-metrics","13":"tag-loonie","14":"tag-oil-prices","15":"tag-opec","16":"tag-trade-agreement","17":"tag-usmca"},"_links":{"self":[{"href":"https:\/\/globalgazette.us\/index.php?rest_route=\/wp\/v2\/posts\/13002","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/globalgazette.us\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/globalgazette.us\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/globalgazette.us\/index.php?rest_route=\/wp\/v2\/users\/10772"}],"replies":[{"embeddable":true,"href":"https:\/\/globalgazette.us\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=13002"}],"version-history":[{"count":1,"href":"https:\/\/globalgazette.us\/index.php?rest_route=\/wp\/v2\/posts\/13002\/revisions"}],"predecessor-version":[{"id":13004,"href":"https:\/\/globalgazette.us\/index.php?rest_route=\/wp\/v2\/posts\/13002\/revisions\/13004"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/globalgazette.us\/index.php?rest_route=\/wp\/v2\/media\/13003"}],"wp:attachment":[{"href":"https:\/\/globalgazette.us\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=13002"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/globalgazette.us\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=13002"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/globalgazette.us\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=13002"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}