{"id":78792,"date":"2026-09-23T15:35:33","date_gmt":"2026-09-23T15:35:33","guid":{"rendered":"https:\/\/www.pantheregroup.com\/2026\/09\/23\/canadian-dollar-falls-on-widening-rate-differentials-as-headwinds-loom-for-loonie\/"},"modified":"2026-09-23T15:35:33","modified_gmt":"2026-09-23T15:35:33","slug":"canadian-dollar-falls-on-widening-rate-differentials-as-headwinds-loom-for-loonie","status":"publish","type":"post","link":"https:\/\/www.pantheregroup.com\/2026\/09\/23\/canadian-dollar-falls-on-widening-rate-differentials-as-headwinds-loom-for-loonie\/","title":{"rendered":"Canadian dollar falls on widening rate differentials as headwinds loom for loonie"},"content":{"rendered":"<p> \n<br \/><iframe loading=\"lazy\" title=\"No sign of U.S. dollar losing dominance anytime soon: Karl Schamotta\" width=\"1080\" height=\"608\" src=\"https:\/\/www.youtube.com\/embed\/vkaWm0xSDvQ?feature=oembed\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" allowfullscreen><\/iframe><\/p>\n<p> The Canadian dollar is down 1.7 per cent this month and fell below 71 cents U.S. in early trading on Wednesday for the first time since July as rising bets for more stateside interest rate hikes put pressure on the loonie. <\/p>\n<p> \u201cThe loonie\u2019s weakness \u2026 is largely a function of the (United States) dollar\u2019s strength,\u201d Karl Schamotta, chief market strategist at Corpay Inc., said in a note on Wednesday. <\/p>\n<p> The U.S. dollar has been on a tear over the past five days, rising against a basket of other major currencies as investors hike their bets that the U.S. Federal Reserve will increase interest rates again at its Oct. 28 meeting after lifting them 25 basis points last week. <\/p>\n<p> The Fed\u2019s funds rate now sits at 3.75 per cent to four per cent versus the Bank of Canada overnight lending rate of 2.25 per cent, which has held steady for the past seven consecutive meetings. <\/p>\n<p> \u201cRate differentials have tilted further against all of the dollar\u2019s major rivals, contributing to losses in spot markets,\u201d Schamotta said. <\/p>\n<p> The world\u2019s 10 major currencies, including the euro, yen and pound, are down 0.19 per cent to nearly one per cent for the Australian dollar over the past five days. <\/p>\n<p> More broadly, U.S. tariffs pose a hurdle for the Canadian currency, Schamotta said. <\/p>\n<p> \u201cMarkets, we think, are bracing for some softness in the economy in the coming months,\u201d he said, as consumers and businesses pull back on spending. <\/p>\n<p> Ottawa\u2019s tax reforms in the form of the productivity mega deduction that were introduced last week, and its efforts to attract global investors and increase sales to the European Union could pay off eventually, Schamotta said, \u201cbut the effects will be incremental and slow to arrive.\u201d <\/p>\n<p> Shaun Osborne, chief currency strategist at the Bank of Nova Scotia, said the Canadian dollar was the \u201cbest of the rest\u201d of the G10 from yesterday to today. <\/p>\n<p> He said the \u201cbiggest drag\u201d on the loonie is the wide spread on interest rates between Canada and the U.S. <\/p>\n<p> But Osborne said the fourth quarter also typically presents stronger headwinds for the Canadian dollar, which could start showing up in the coming weeks. <\/p>\n<p> He said investors should look for negative returns for the loonie versus the U.S. dollar in October and November, and there may be some softness against the euro and the pound. <\/p>\n<p> The Australian dollar is nearing par with its Canadian counterpart for the first time in nine years, with Osborne predicting it to solidify those gains due to expectations of a strong jobs report later today in that country. <\/p>\n<p> <em>\u2022 Email: gmvsuhanic@postmedia.com <\/em> <\/p>\n<ul class=\"related_links\">\n<li>Trump is angry about the loonie &#8216;imbalance&#8217;: But what does he mean and what can he do about it?<\/li>\n<li>Bank of Canada&#8217;s new $20 bill features new security features and Canadian, Indigenous motifs<\/li>\n<\/ul>\n\n<br \/>Canadian dollar falls on widening rate differentials as headwinds loom for loonie<\/a><br \/>\n<br \/>2026-09-23 15:35:33<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Canadian dollar is down 1.7 per cent this month and fell below 71 cents U.S. in early trading on Wednesday for the first time since July as rising bets&#8230;<\/p>\n","protected":false},"author":2,"featured_media":78793,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[31],"tags":[],"class_list":["post-78792","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy"],"_links":{"self":[{"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/posts\/78792","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/comments?post=78792"}],"version-history":[{"count":0,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/posts\/78792\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/media\/78793"}],"wp:attachment":[{"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/media?parent=78792"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/categories?post=78792"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/tags?post=78792"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}