After nearly falling below 70 cents U.S. in late June, the loonie has rebounded 2.6%
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The Canadian dollar on Friday pushed past 72 cents U.S., continuing its reversal that started in late June due to a sliding greenback as bets fade for the United States Federal Reserve to hike interest rates.
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“Spread compression (on interest rates) is a clear motivation for the (Canadian dollar),” Shaun Osborne, currency strategist at Bank of Nova Scotia, said in a note on Friday.
After nearly falling below 70 cents U.S. in late June, the loonie has rebounded 2.6 per cent as the rate differential between the United States’ and Canada’s two-year bonds has shrunk by 25 basis points since a late July peak, helping to support the Canadian dollar.
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Those short-term differentials, driven by central bank interest rate outlooks, have narrowed as markets cut back on bets for the U.S. Federal Reserve to hike.
Bets for a Fed rate hike in September fell to a 30 per cent chance on Friday from about 65 per cent at the start of the month, with poor U.S. economic data driving the change.
The U.S. Census Bureau on Friday said stateside retail sales fell 0.6 per cent month over month in July, the first decline since May 2025.