Loonie Extends Weekly Losses Amid Global Market Shifts

The Canadian dollar weakened further this week as falling oil prices and changing interest rate expectations created a challenging environment for the currency.

Trading near 1.3975 against the U.S. dollar, the loonie has now extended its weekly decline, reflecting broader shifts in global risk sentiment.

Geopolitical Optimism Pressures Energy Markets

Oil prices dropped significantly after investors reacted to reports suggesting progress toward easing tensions in the Middle East. With reduced fears of supply disruption, crude markets gave back recent gains.

The Strait of Hormuz, a critical passage for global oil shipments, remains a key focus for traders due to its strategic importance in global energy flows.

Central Bank Outlook Influences Currency Direction

Recent communications from the Bank of Canada have led markets to scale back expectations for future rate increases. Investors now anticipate a more stable interest rate environment in the near term.

This shift has reduced support for the Canadian dollar, as interest rate differentials play an important role in currency valuation.

Outlook for CAD Remains Sensitive

Looking ahead, the Canadian dollar is likely to remain sensitive to two main drivers:

• • Oil price movements
  • Interest rate expectations from the Bank of Canada

Unless either factor stabilizes, volatility in the loonie may continue in the near term.