Canadian Dollar Hits 4-week High

The Canadian dollar strengthened to around 1.40 per US dollar in October, reaching a more than one-month high as the outlook for BoC policy tilted toward tighter conditions. Expectations of a narrowing US-Canada interest rate differential have supported the loonie, amid a more hawkish outlook for the BoC’s next policy decision, scheduled for October 28th, relative to the US Fed. BoC Governor Tiff Macklem recently said the central bank expects to raise its quarterly inflation forecast significantly this month, following hawkish remarks last week about energy-driven price pressures. The oil rally has added to upward pressure on energy costs amid an escalation in the Middle East conflict. Meanwhile, Canadian retail sales are expected to have increased 0.7% month-over-month in September, extending a 1.2% rise in August, adding to the inflation outlook.

The Canadian Dollar touched 1.41 against the USD, the highest since September 2026. Over the past 4 weeks, US Dollar Canadian Dollar gained 0.18%, and in the last 12 months, it increased 0.28%.

The Canadian dollar strengthened to around 1.41 per US dollar in October, reaching a near one-month high following the release of September inflation data. Canada’s annual inflation rate rose to 3.1%, its highest level in four months, driven by higher gasoline prices, but came in below market expectations of 3.2%. While rising energy prices pushed headline inflation higher, underlying measures remained subdued, with CPI-median slowing to 1.9% and CPI-trim easing to 1.8% in September. Despite the downside surprise, the outlook for Bank of Canada policy remained tilted toward tighter conditions, as policymakers flagged upside risks to inflation. Governor Tiff Macklem said on Saturday that the central bank expects to raise its quarterly inflation forecast significantly this month, following hawkish remarks last week about energy-driven price pressures. Expectations of a narrowing US-Canada interest-rate differential have provided further support for the loonie.