The Canadian dollar has weakened against the US dollar, retreating from recent highs, due to a combination of factors including stronger US economic data, a widening US-Canada yield differential, and weaker Canadian economic figures. The shift has led to capital flowing back into the US dollar, further impacting the Canadian dollar’s value.
- The Canadian dollar weakened toward 1.36 per US dollar, retreating from 16-month highs.
- Widening US-Canada yield differentials shifted capital back toward the greenback.
- Stronger US labor figures pushed Treasury yields higher and reinforced demand for dollar assets.
- Canada’s unexpected January job loss and a dip in labor force participation signaled cooling momentum.
- The Bank of Canada held its policy rate, offering little hawkish guidance.
- USD/CAD pair approaches mid-1.3600s as USD edges higher ahead of US CPI.
- USD/CAD is building on this week’s rebound from the 1.3500 psychological mark.
- Momentum lifts spot prices to a four-day high, around the 1.3630 region.
The information suggests a bearish outlook for the Canadian dollar in the short term. The combination of a stronger US economy, attractive US yields, and comparatively weaker Canadian economic data points towards continued downward pressure on the Canadian dollar’s value against the US dollar. Any potential gains will likely be capped as long as these factors remain in play.