After bobbing in a tight range near 1.38, USD/CAD finally broke above 1.3850 on Tuesday—it’s highest level in two weeks—as traders look ahead to U.S. inflation data.
So what’s going on? Let’s break it down.
News and Updates
After a rough day in global bond markets Tuesday—where investors sold off government debt, driving borrowing costs to levels not seen in decades and raising concerns that economic conditions may continue to deteriorate—markets calmed somewhat on Wednesday. That gave stock markets a chance to stabilize, with the Nasdaq in particular bouncing higher after Google’s parent company Alphabet dodged a potential breakup in a major antitrust case brought forward by the U.S. government.
The Canadian dollar, or loonie, has been anything but boring this year. As we roll into fall 2025, traders, businesses, and travelers all want to know: where’s the loonie going next?
The answer isn’t simple. Canada’s economy is showing both resilience and weakness. GDP contracted 1.6% annualized in the second quarter of 2025 as exports plunged and business investment fell, yet household spending and housing stayed firm. This push and pull means the loonie is unable to make any clear breakout moves. Still, it isn’t in free fall and is holding up better than expected.
After weakening on the release of some dismal jobs data last week, the Canadian dollar has regained a bit of strength and is back trading in the familiar 1.375 to 1.38 range. The modest rebound has more to do with broad U.S. dollar weakness than any real surge in Canadian dollar strength.