USD/CAD extends its decline on Friday as broad US Dollar (USD) weakness lifts the Canadian Dollar (CAD) to its highest level in more than two weeks. At the time of writing, the pair trades around 1.4138, heading for its first weekly loss in six weeks after reaching 1.4299 on Wednesday, its highest level since April 2025.
The Greenback comes under pressure as concerns over AI-related investments weigh on equities and encourage investors to move into government bonds, pushing US Treasury yields lower, reducing the appeal of Dollar-denominated assets.
The benchmark 10-year US Treasury yield trades near 5.08%, close to three-week lows. Meanwhile, the US Dollar Index (DXY), which measures the Greenback against a basket of six major currencies, hovers around 101.65 after climbing to an 18-month high of 102.94 earlier this week.
The risk-off sentiment overshadows a hawkish Federal Reserve (Fed) outlook following this week’s stronger-than-expected US inflation reports. The Consumer Price Index (CPI) rose 0.6% month-on-month in September, accelerating from 0.4% in August and marking its largest monthly increase since April. The Producer Price Index (PPI) increased 1.3% in September after rising 0.5% the previous month, recording its biggest monthly advance since March 2022.
Higher Oil prices remain a key source of inflation pressure since the Middle East war began in late February. With US-Iran negotiations showing little progress and Saudi-Houthi tensions escalating, inflation could remain above the Fed’s 2% target for longer.
Fed officials have shown little urgency to raise interest rates again this month following September’s 25-basis-point increase. Speaking in Bangkok on Friday, Fed Chair Kevin Warsh avoided committing to a policy decision, saying, “I don't prejudge meetings.”
The CME FedWatch Tool shows traders pricing in a 15% probability of a rate hike at the October 27-28 meeting and a 90% chance of an increase in December.
On the Canadian Dollar side, traders anticipate a rate hike in December but expect the Bank of Canada (BoC) to leave rates unchanged in October, as it has throughout this year. With underlying inflation near the central bank’s 2% target and growing slack in the labour market, there is little reason for the BoC to raise interest rates in the near term.
The table below shows the percentage change of Canadian Dollar (CAD) against listed major currencies this week. Canadian Dollar was the strongest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.57% | -0.97% | -0.17% | -0.98% | 0.13% | -1.02% | -0.88% | |
| EUR | 0.57% | -0.34% | 0.37% | -0.37% | 0.71% | -0.42% | -0.27% | |
| GBP | 0.97% | 0.34% | 0.63% | -0.03% | 1.04% | -0.08% | 0.03% | |
| JPY | 0.17% | -0.37% | -0.63% | -0.65% | 0.43% | -0.81% | -0.58% | |
| CAD | 0.98% | 0.37% | 0.03% | 0.65% | 1.10% | -0.15% | 0.09% | |
| AUD | -0.13% | -0.71% | -1.04% | -0.43% | -1.10% | -1.11% | -0.95% | |
| NZD | 1.02% | 0.42% | 0.08% | 0.81% | 0.15% | 1.11% | 0.12% | |
| CHF | 0.88% | 0.27% | -0.03% | 0.58% | -0.09% | 0.95% | -0.12% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Canadian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent CAD (base)/USD (quote).