Canadian Dollar Slides as Oil Weakens and US Rates Hold Firm
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The Canadian dollar is losing ground. Two forces are pushing it down: falling oil prices and a strong US interest rate outlook.
Oil is Canada's biggest export. When oil prices drop, demand for the Canadian dollar usually falls with it. That is happening now.
At the same time, the US Federal Reserve is expected to keep interest rates high for longer. Higher rates make US assets more attractive to investors. Money flows to the US dollar, leaving the Canadian dollar weaker.
A weaker Canadian dollar means imports cost more for Canadians. It also makes Canadian exports cheaper for foreign buyers.
For now, the pressure on the loonie looks set to continue as long as oil stays weak and US rates stay high.