The Canadian dollar continues to be pummeled by broader global economic factors, namely a surprisingly resilient US economy and higher government bond yields. This has resulted in the USD/CAD hitting multi-week lows this week.
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The Canadian dollar continued its downward trend on Tuesday morning, slipping to just under 1.3740 (USD/CAD). This latest slide was due to Canadian government 10-year bond yields rising by 1.1 basis points to 4.024%.
The Canadian dollar is holding steady to start the week, having climbed about half a penny to close last week. This comes after the Canadian dollar touches a seven-month low against the US dollar earlier in October. The primary driver for the USD/CAD pairing continues to be US Treasury yields, which recently hit their highest level since 2007.
This morning, the critical Canadian inflation number was reported at 3.8 percent, coming in below the projected 4 percent. Given that inflation is among the most delayed of economic indicators and considering the overarching trend of a weakening Canadian economy, it seems unlikely that the Bank of Canada will raise rates in the upcoming week, and it appears that the BoC has now hit its terminal rate.