Canadian Dollar Weakens Further

2026-02-02 14:37 By Felipe Alarcon 1 min. read

The Canadian dollar weakened past 1.36 per US dollar, retreating from sixteen-month highs as weaker domestic growth signals and falling oil prices coincided with a renewed upswing in US dollar strength.

Canadian momentum has softened after GDP was flat in November and goods producing industries contracted for a third time in four months led by ongoing manufacturing weakness, underscoring persistent excess supply and muted inflation pressure.

This has reinforced expectations that the BoC can remain patient rather than adopt a more restrictive stance, particularly as labor market slack continues to build.

At the same time, external support has faded as oil prices slid toward the low $60s per barrel amid easing geopolitical risk tied to US Iran talks, weakening Canada’s terms of trade.

These pressures have been amplified by a firmer US dollar following Kevin Warsh’s nomination as Federal Reserve chair, which lifted demand for USD liquidity.



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