USD/CAD climbed to its highest level in roughly a month after the Federal Reserve raised interest rates and signaled another hike before year-end. The Canadian dollar extended a six-session losing streak against its U.S. counterpart, with oil prices failing to offset the pressure.
The Canadian dollar weakened against the U.S. dollar on Wednesday after the Federal Reserve raised interest rates as expected and signaled another increase before year-end, reinforcing the greenback's advantage over the loonie. At around 2:24 p.m. ET, USD/CAD traded around C$1.394, putting the Canadian dollar at roughly 71.7 U.S. cents.
Pair extends a six-session climb
The pair has risen for a sixth straight session and reached about C$1.3944 during the day, its highest level in roughly a month. The Fed raised its benchmark rate by 25 basis points to 3.75%-4.00%, its first increase since July 2023, and its updated projections showed policymakers expect another hike before the end of 2026.
This broader dollar strength showed up across markets: the U.S. dollar index rose 0.4% to 99.89 against a basket of six major peers. Rate hike expectations had been building on U.S. economic data pointing to resilient growth and elevated inflation, with the Fed's preferred gauge, the personal consumption expenditures price index, showing a 3.7% year-over-year increase.
Oil fails to offset the loonie's decline
Higher U.S. yields can make dollar-denominated assets more attractive relative to Canadian assets, particularly since expectations for Canadian monetary policy remain comparatively softer. Oil prices, meanwhile, provided limited support to the commodity-linked currency. Crude remained elevated amid concerns over global supply, but recent moves in oil have not been enough to reverse the loonie's broader decline.
The currency's weakness follows a run of losses in recent sessions, reflecting shifting expectations for the Bank of Canada's policy path alongside movements in global risk appetite and commodity markets.
Sources: Investing.com, Investing.com
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