The Canadian dollar slid to its weakest level in a year and a half on Monday, caught in a double squeeze from a surging US dollar and fresh signs that Canada’s own economy is losing steam.
The loonie traded 0.1% lower at 1.4257 per US dollar — about 70.14 US cents — after touching its softest intraday level since April 2025 at 1.4293. The move was driven less by domestic news than by global currency flows, as worries over France’s budget deficit hammered the euro and sent investors piling into the greenback.
Weak services data adds to the pressure
Adding to the gloom, new S&P Global data showed Canada’s services economy contracting for a fourth consecutive month in September. The Business Activity Index rose to 48.3 from 46.8 in August but stayed firmly below the 50 mark that separates expansion from contraction. Tariffs and the Middle East conflict were blamed for the uncertainty weighing on businesses.
George Davis, chief technical strategist at RBC Capital Markets, said the loonie’s slide was largely dictated by developments in Europe rather than domestic factors, with broad US dollar strength doing most of the damage.
Markets are betting against the loonie
Speculators have sharply raised their bearish bets on the Canadian currency. Data from the US Commodity Futures Trading Commission showed non-commercial net short positions climbing to 78,671 contracts as of September 29, up from 53,210 the week before.
Meanwhile, Canadian bond yields moved higher across a steeper curve, with the 10-year rising 4.4 basis points to 3.989%, edging closer to the nearly three-year high touched last Thursday. And the price of oil — one of Canada’s major exports — fell 1.8% to $89.43 a barrel after Middle East crude exports rose and G7 nations pledged to boost supplies.
Politically, Quebec was heading to the polls on Monday, with a separatist party looking set to win — though the campaign focused more on US President Donald Trump than on independence, a sign of how heavily American politics now weighs on Canada’s economic mood.
Source: Reuters