Canadian dollar falls below 71 cents U.S. on widening rate differentials as headwinds loom for loonie

Skip to Content News Archives Economy Energy Oil & Gas Renewables Electric Vehicles Mining Commodities Agriculture Real Estate Mortgages Mortgage Rates Finance Banking Insurance Fintech Cryptocurrency Work Wealth Smart Money Wealth Management Investor Personal Finance Family Finance Retirement Taxes High Net Worth FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials More Innovation Information Technology FP500 Podcasts Small Business Lives Told Tails Told Shopping Financial Post Store Obituaries Place a Notice Advertising Advertising With Us Advertising Solutions Postmedia Ad Manager Sponsorship Requests Classifieds Place a Classifieds ad Working Profile Settings My Subscriptions My Offers Newsletters Customer Service FAQ News Economy Energy Mining Real Estate Finance Work Wealth Investor FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials This advertisement has not loaded yet, but your article continues below.HomeNewsEconomyCanadian dollar falls below 71 cents U.S. on widening rate differentials as headwinds loom for loonie'The loonie's weakness ... is largely a function of the (United States) dollar's strength,' said Karl SchamottaLast updated 3 minutes ago The Canadian dollar is down 1.7 per cent this month and fell below 71 cents U.S. in early trading on Wednesday. Photo by Brent Lewin/Bloomberg filesThe 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.THIS CONTENT IS RESERVED FOR SUBSCRIBERS ONLYSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.SUBSCRIBE TO UNLOCK MORE ARTICLESSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.REGISTER / SIGN IN TO UNLOCK MORE ARTICLESCreate an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.THIS ARTICLE IS FREE TO READ REGISTER TO UNLOCK.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an Account“The loonie’s weakness … is largely a function of the (United States) dollar’s strength,” Karl Schamotta, chief market strategist at Corpay Inc., said in a note on Wednesday.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.SUBSCRIBER EXCLUSIVE: FP West: Energy Insider brings you behind the oilpatch’s closed doors with exclusive insights from insiders every Wednesday morning.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. 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Please try againThe Fed’s 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.“Rate differentials have tilted further against all of the dollar’s major rivals, contributing to losses in spot markets,” Schamotta said.The world’s 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.More broadly, U.S. tariffs pose a hurdle for the Canadian currency, Schamotta said.“Markets, we think, are bracing for some softness in the economy in the coming months,” he said, as consumers and businesses pull back on spending.Ottawa’s 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, “but the effects will be incremental and slow to arrive.”Shaun Osborne, chief currency strategist at the Bank of Nova Scotia, said the Canadian dollar was the “best of the rest” of the G10 from yesterday to today.He said the “biggest drag” on the loonie is the wide spread on interest rates between Canada and the U.S.But Osborne said the fourth quarter also typically presents stronger headwinds for the Canadian dollar, which could start showing up in the coming weeks.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.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.This advertisement has not loaded yet.Notice for the Postmedia NetworkThis website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. 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