Canadian Dollar Extends Pullback

The Canadian dollar weakened slightly to 1.37 per USD, extending its retreat from the seven-week high of 1.358 reached on April 30, as persistent inflation concerns and rising US Treasury yields supported the greenback following hotter-than-expected US inflation data. The latest US CPI report showed headline inflation accelerating to 3.8%, reinforcing expectations that the Federal Reserve may keep interest rates elevated for longer as price pressures broaden across the economy. Additional support for the US dollar came from ongoing geopolitical uncertainty in the Middle East, as limited progress in negotiations involving Iran kept fears alive that disruptions around the Strait of Hormuz could persist. Meanwhile, elevated oil prices continued to limit broader downside pressure on the commodity-linked Canadian dollar.

The Canadian Dollar touched 1.37 against the USD, the lowest since April 2026. Over the past 4 weeks, US Dollar Canadian Dollar lost 0.12%, and in the last 12 months, it decreased 1.68%.

The Canadian dollar weakened to 1.37 per USD, extending the pullback from the seven-week high of 1.358 on April 30th following weak domestic labor data. Net employment in Canada unexpectedly fell by 17K jobs in April and the unemployment rate rose to a six-month high of 6.9%, strengthening bets that the BoC will prioritize economic growth and refrain from tightening policy further this year. At the same time, stronger-than-expected US labor data boosted expectations that the Federal Reserve could keep interest rates elevated for longer, backing the preference for the greenback instead of the loonie for North American investors. Meanwhile, investors continued to monitor developments in the Middle East after renewed US-Iran hostilities raised uncertainty over prospects for a deal that could restore oil supply from the region and ease energy inflation.