The Canadian Dollar Hit a Seven-Week Low as the Rate Gap With the US Widened Again

The Canadian dollar weakened to its lowest level in nearly seven weeks this week as a widening rate gap between the Bank of Canada and the Federal Reserve pulled capital toward the US dollar. Photo: iStock.

Market

The Canadian Dollar Hit a Seven-Week Low as the Rate Gap With the US Widened Again

Sep 25, 2026 6 min The Market Desk

The Brief

USD/CAD closed at 1.4138 Thursday, meaning the Canadian dollar bought 70.73 US cents, its weakest level in almost seven weeks.
The loonie has weakened in nine of the last ten sessions, sliding from 1.3859 on September 12 to 1.4138 on September 24.
The proximate driver is rate divergence: the Federal Reserve raised its rate 25 basis points on September 16 while the Bank of Canada has held at 2.25 percent since April.
The TSX Composite closed at 35,706.46 Thursday, down 44.97 points, a smaller move than Wednesday steep 584-point decline driven by a metals sector reversal.
Energy names outperformed the broader index Thursday as WTI crude rose 1.97 percent to 93.98 US dollars, even as mining names stayed under pressure from the same rate dynamics hitting the currency.

USD/CAD closed at 1.4138 on Thursday, meaning the Canadian dollar bought 70.73 US cents, its weakest level in almost seven weeks. The loonie has weakened in nine of the last ten sessions, moving from 1.3859 on September 12 to 1.4138 on September 24, a decline of more than 2 percent in under two weeks.

USD/CAD | US DOLLAR / CANADIAN DOLLAR 1.4138 ▲ +0.25% DAILY | SEP 12-24

Source: USD/CAD daily exchange rate, MTFX. | hdq.ca

The shaded region marks the final four sessions of the run, during which the Canadian dollar extended its slide to a fresh seven-week low against the US dollar.

Why the CAD Moved Against the Oil Story Today

Currency direction usually tracks oil when energy makes up as much of the index as it does on the TSX, and WTI crude actually rose 1.97 percent Thursday to 93.98 US dollars. The loonie fell anyway. The mechanism running the currency this week is not oil. It is the widening gap between Canadian and US policy rates.

The Federal Reserve raised its target range a quarter point to 3.75 to 4.00 percent on September 16, the first US increase since 2023, under a notably hawkish Chair Kevin Warsh. The Bank of Canada has not moved since its October 2025 cut, holding at 2.25 percent through seven straight decisions including September 2. A 175 basis point gap between the two currencies rates pulls capital toward the higher yielding US dollar, and that flow is showing up directly in the currency pair, independent of what oil is doing on any given day.

The TSX Absorbed a Smaller Hit Today After Wednesday Steep Drop

The S&P/TSX Composite Index closed at 35,706.46 Thursday, down 44.97 points, a modest move compared with Wednesday 584-point decline, the index sharpest single session loss in more than three months. That larger move traced to a sharp reversal in copper, gold and silver prices, which hit mining names including Teck Resources, Ivanhoe Mines and Agnico Eagle Mines hard earlier in the week.

Thursday brought a clearer sector split. Energy stocks gained as WTI firmed, while materials stayed under pressure from the same higher-yield dynamic weighing on the currency. A rising US dollar makes US-denominated gold and copper less attractive to hold, compounding the pressure already coming from higher bond yields.

Sources

USD/CAD daily exchange rate, MTFX, September 12 to 24, 2026. S&P/TSX composite finishes in negative territory, BNN Bloomberg, September 24, 2026. WTI Crude Oil daily close, Investing.com.

Educational content only. This article is published for informational and professional development purposes. It does not constitute investment advice, financial planning advice, or a recommendation to buy or sell any security. Canadian advisors should apply their own professional judgment. Full disclaimer.

Advisor Toolkits — Sep 25, 2026

🛡️ Respond ▼

What They're Feeling

Clients who travel or hold US dollar expenses feel the pinch of a weaker loonie directly. Clients focused purely on the TSX may not have connected today quieter session to the currency story running underneath it.

What to Say

The Canadian dollar weakened to its lowest level in almost seven weeks today, and it is happening for an identifiable reason: the US Federal Reserve raised rates this month while the Bank of Canada has not moved since April. That gap is pulling money toward US dollar assets. It is a currency story more than a stock market story today, and I want to look at what it means for any US dollar exposure or upcoming cross-border spending in your plan.

Who's Affected

High impact: Clients with upcoming US dollar expenses, cross-border property, or travel plans, who are now converting at a weaker rate than a month ago.

Mixed impact: Clients holding US equities unhedged, who see a currency tailwind on the Canadian dollar value of those holdings even as the loonie itself weakens.

Potential benefit: Clients with Canadian export sector exposure, where a weaker currency supports competitiveness.

Action Checklist

Review any client with a near term US dollar cash need for currency timing.

Confirm unhedged US equity holders understand the currency tailwind showing up in their Canadian dollar returns.

Flag Canadian energy or exporter concentrated clients for a currency-adjusted review.

Monitor USD/CAD alongside the October 28 Bank of Canada decision as the next scheduled catalyst.

Follow-Up Email Template

Subject: The Canadian Dollar Weakness This Week and What It Means for You

Hi [Client Name],

The Canadian dollar weakened to its lowest level in almost seven weeks this week, closing at 1.4138 against the US dollar on Thursday.

The driver is a widening gap between the US Federal Reserve, which raised rates this month, and the Bank of Canada, which has held steady since April. That gap is pulling capital toward US dollar assets.

I wanted to flag this in case you have any upcoming US dollar spending, cross-border property, or unhedged US equity exposure worth reviewing together.

[Your Name]

This communication is for educational purposes only and does not constitute personalized investment advice.

🎯 Prospect ▼

Client Profiles to Target

DIY investors and cross-border households with unmanaged US dollar exposure or upcoming US dollar spending who have not adjusted for the weaker Canadian dollar.

Opening Line

I wanted to reach out because the Canadian dollar just hit its weakest level in almost seven weeks, and that has a direct impact on anyone with upcoming US dollar spending or unhedged cross-border holdings.

Value Proposition

A self-directed investor with US dollar exposure often has no framework for currency timing beyond checking the rate when a payment comes due. An advisor can identify the mechanism behind a move like this one, a widening interest rate gap between Canada and the US, and use it to plan around currency risk deliberately rather than reactively.

Discovery Questions

Do you have any upcoming expenses or property in US dollars?

How do you currently manage currency risk in your portfolio?

Has anyone reviewed how a weaker Canadian dollar affects your specific holdings?

Prospecting Email Template

Subject: The Canadian Dollar Just Hit a Seven-Week Low

Hi [Name],

The Canadian dollar weakened to its lowest level in almost seven weeks this week, driven by a widening interest rate gap between Canada and the United States.

If you have any US dollar spending or unhedged cross-border exposure, it is worth ten minutes to review what this means for you.

[Your Name]

This communication is for educational purposes only and does not constitute personalized investment advice.