Canadian dollar holds near recent lows as stronger US dollar keeps pressure on currency

The Canadian dollar was little changed in early trading on Friday but remained under pressure near a multi-week low as broad US dollar strength and rising US Treasury yields continued to weigh on the Canadian currency.

At around 8:54 a.m. Eastern Time, USD/CAD traded near C$1.4149, up about 0.08% on the day. The pair opened at around C$1.4147 and traded in a range of roughly C$1.4140 to C$1.4150 during the session.

The move extends a recent trend of Canadian dollar weakness. The currency has remained under pressure throughout the week after touching a two-month low, with broad US dollar strength and weak Canadian retail sales weighing on sentiment.

The latest pressure has largely come from the US interest rate market. The US dollar was heading for a second consecutive weekly gain as Treasury yields rose sharply and expectations for further Federal Reserve interest rate hikes increased, boosting demand for the US currency.

Fresh market commentary on Friday morning focused on the continued strength of the US dollar and expectations for a relatively more hawkish Federal Reserve policy path. That has kept the US yield advantage over Canada at the center of foreign exchange trading.

The Canadian dollar has also struggled despite higher oil prices, suggesting that the currency’s traditional support from Canada’s energy exports is being overshadowed by interest rate differentials and US dollar dynamics.