Canadian Dollar Near 12‑Day Low, Oil Fails

Market Overview

At 16:43 ET the USD/CAD pair was trading around C$1.392, leaving the Canadian dollar about 0.3% weaker on the day after it touched a 12‑day low of C$1.3929.

Canadian Inflation Data

Canada’s consumer price index (CPI) for August rose 3.0% year‑on‑year, unchanged from July and in line with expectations. On a monthly basis prices fell 0.1%. The Bank of Canada’s preferred median inflation measure held at 2.0% and the trimmed‑mean measure at 1.9%. Food inflation eased to 2.8%, while gasoline prices remained a major driver, rising 22.8% from a year earlier.

Oil Price Influence

Brent crude jumped above $108 a barrel on Monday as fresh attacks and supply disruptions in the Middle East heightened concerns about global oil availability. Higher oil prices are normally supportive for the loonie because Canada is a major crude exporter, but the recent surge also revived inflation concerns and reinforced expectations of tighter U.S. monetary policy.

U.S. Dollar and Rate‑Hike Expectations

Markets are now pricing roughly a 90% probability that the U.S. Federal Reserve will raise interest rates this week. The dollar index rose nearly 0.4% on Monday as investors moved toward traditional safe‑haven assets amid geopolitical tensions and a sell‑off in global technology stocks.

Recent Currency Movements

The loonie ended the previous week weaker after U.S. inflation data boosted expectations for a Fed rate increase, trading at C$1.3862 per U.S. dollar on Friday and having touched C$1.3883, its weakest level since September 2.