Canadian Dollar Hits 8-week Low

The Canadian dollar stabilized near the 1.37 per USD mark, hovering near two-month lows as a shift toward diplomacy in the Middle East neutralized the safe-haven bid for the greenback while simultaneously cooling the global energy rally. President Trump’s decision to postpone military strikes on Iranian infrastructure for five days triggered a collapse in energy prices and eased the geopolitical premium previously embedded in the Loonie. While the Bank of Canada and the Federal Reserve both maintained a cautious stance on inflation, the domestic currency found a technical floor as US Dollar demand softened following disappointing American construction and manufacturing data. These factors effectively countered the loss of oil-led support, as Federal Reserve officials downplayed the necessity of near-term rate hikes despite the stagflationary risks cited by Chicago Fed President Austan Goolsbee.

The Canadian Dollar touched 1.38 against the USD, the lowest since January 2026. Over the past 4 weeks, US Dollar Canadian Dollar gained 0.38%, and in the last 12 months, it decreased 3.95%.

The Canadian dollar depreciated to the 1.37 per USD mark in March, its weakest in nearly two months as deteriorating geopolitical tensions in the Middle East drove global markets to find safety in the greenback, while investors assessed the policy outlooks between the Bank of Canada and the Federal Reserve. Strikes from the US and Israel continued to target Iranian officials, dimming any hopes of a diplomatic resolution and increasing the pivot away from riskier currencies. Still, the Canadian dollar depreciated at a softer magnitude from other G10 currencies as it receives support from the conflict's resulting surge in energy prices, which increase the influx of foreign exchange into major energy exporters like Canada. On the macroeconomic front, the BoC maintained its benchmark rate unchanged as expected in its March decision. The BoC also flagged risks to both growth and inflation due to the conflict, while the Fed held rates but stressed upside inflation risks.