CANADA FX DEBT-Canadian dollar hits eight-week low as investors brace for domestic slowdown

By Reuters News

By Fergal Smith

TORONTO, Sept 23 (Reuters) - The Canadian dollar weakened to an eight-week low against its US counterpart on Wednesday as the greenback notched broad-based gains and investors bet that ongoing trade uncertainty would slow Canada's economy.

The loonie was trading 0.3% lower at 1.41 per US dollar, or 70.92 US cents, after touching its weakest intraday level since July 29 at 1.4106.

  • "Markets, we think, are bracing for some softness in the economy in the coming months as US tariffs hit targeted sectors, and consumers and firms rein in spending and investment," Karl Schamotta, chief market strategist at Corpay, said in a note.

  • "The government's tax reforms, its courting of investors and its push to sell more to the European Union should pay off over time, but the effects will be incremental and slow to arrive."

  • New US tariffs could slash Canada's fourth-quarter growth to below 1%, reflecting a new wave of uncertainty that threatens to hit investment and hiring, Bank of Canada Governor Tiff Macklem said on Monday.

  • Last week, Prime Minister Mark Carney unveiled a measure aimed at strengthening the economy, saying that Canada will let businesses immediately write off the cost of most new capital investments for tax purposes.

  • The US dollar rose to its highest level in nearly two months against a basket of major currencies as investors priced in a rate hike cycle from the Federal Reserve, while oil prices jumped as comments from Iran cast doubt on progress in peace talks.

  • US crude oil futures were trading 2.2% higher at $92.49 a barrel. Oil is one of Canada's major exports.

  • Canadian bond yields moved higher across the curve, tracking moves in US Treasuries.

  • The 10-year was up 11.2 basis points at 3.942%, moving back in reach of the nearly three-year high it touched last week at 3.987%. Still, it moved 1.7 basis points further below the US equivalent to a gap of about 115 basis points in favor of the US note, marking the largest gap since June 2025.

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