04.11.202513:47:24UTC+00Canadian Dollar Drops to 7-Month Lows

The Canadian dollar has edged closer to C$1.41 against the US dollar, marking a near seven-month low, primarily due to a strengthening US dollar and softer Canadian economic data that have prompted dovish expectations for the Bank of Canada. Following a 25 basis point rate cut by the Federal Reserve, Chair Powell cautioned that a December rate cut is far from guaranteed, leading to a reassessment of the previously anticipated reduction. Similarly, the Bank of Canada reduced its rate by 25 basis points to 2.25% and indicated that this might be the final adjustment in the current cycle, though market attention has since shifted to signs of weakening economic activity. Canada's GDP for September is projected to increase by 0.1% on a monthly basis, while the August figure was revised to show a 0.3% drop, the most significant monthly decline since December 2022. This pattern reflects ongoing trade tensions and the adverse effects of higher policy interest rates. Governor Tiff Macklem explained that the rate cut aims to support an economy affected by US tariffs and trade disruptions. However, he emphasized that further cuts are not automatic, cautioned against the potential structural damage from protectionism, and highlighted the Bank's preparedness to act if the economic outlook deteriorates.