2026.09.2521:17:40UTC+00CAD Weakens on Widening US-Canada Rate Gap

The Canadian dollar edged down to around 1.41 per US dollar in September, its weakest level in more than a month, as investors anticipated a widening interest-rate gap between the US and Canada. Markets expect the Federal Reserve to continue tightening policy while the Bank of Canada leaves rates on hold. At its most recent meeting, the Fed raised its federal funds target range, further enhancing the US dollar’s yield advantage over the loonie. In contrast, the BoC kept its key policy rate unchanged at 2.25% in September. Persistently high oil prices are adding upward pressure on Canadian inflation, though this may be tempered by economic slack linked to trade tensions with the US. Canadian retail sales are estimated to have risen 1.3% month over month in August, recovering from a decline in July. If confirmed, this would be the strongest increase since January and may point to resilient domestic demand.