FX.co ★ Canadian Dollar Weakens to May Lows

The Canadian dollar has fallen past 1.394 per US dollar, marking its lowest point since May. This decline is attributed to softer economic data from Canada, which has heightened expectations for further easing by the Bank of Canada. Additionally, oil prices have been retreating. Following the Bank of Canada's decision to cut the policy rate to 2.50% on September 17th, the Summary of Deliberations has suggested a willingness to consider additional rate cuts should downside risks continue. This has led markets to anticipate further easing and has diminished the appeal of CAD for yield-sensitive investment. The S&P Global Canada Manufacturing PMI dropped to 47.7 in September, indicating the eighth consecutive month of contraction. This reflects a decline in new orders and output, thereby strengthening the rationale for reduced rates. Moreover, the decrease in crude oil prices, driven by expectations of increased OPEC+ production and weaker demand from the US and Asia, has further compounded the pressure on the Canadian currency by removing a key terms-of-trade support.