Canadian Dollar Slides as Rate Cut Bets Rise Amid Global Economic Concerns
Toronto, ON – The Canadian dollar weakened against the U.S. dollar on Tuesday, pressured by rising global borrowing costs and growing expectations of a potential interest rate cut by the Bank of Canada (boc) later this month.the loonie reached a low of 1.3815 before settling at 1.3790 per U.S. dollar (72.52 U.S.cents), a drop of 0.3% on the day. Market data indicates the probability of a BoC rate cut at the september 17 policy meeting has risen too approximately 50%, up from 40% prior to Friday’s disappointing economic data release. That data revealed a sharper-than-anticipated contraction of the Canadian economy in the second quarter.
The Bank of Canada last adjusted its benchmark interest rate in March, lowering it to 2.75%.
“The market is increasingly pricing in a rate cut from the Bank of Canada this month,” explained Marc Chandler, chief market strategist at Bannockburn Global Forex. “This is a response to a confluence of factors, including weakening domestic economic indicators and broader global economic anxieties.”
Contributing to the market unease are surging U.S. 30-year Treasury yields, which climbed to their highest levels since mid-July, mirroring similar increases in European and U.K. bond yields. Investors are expressing concerns about the fiscal health of major economies worldwide. The sell-off in both stock and bond markets is further amplifying this sense
