The Canadian dollar experienced a significant decline, falling beyond 1.35 per USD in October and hitting a one-week low. This shift in the currency's value comes as disappointing economic data amplifies expectations for additional monetary easing in Canada, while the US dollar gained strength.
Data from the S&P Global Canada Composite PMI indicated a drop to 47.0 in September, down from 47.8 in August, marking a fourth consecutive month of contraction in private sector activity. The decline is further underscored by a significant drop in the Services PMI, which plummeted to 46.4, reflecting the most pronounced downturn since March.
Compounding the Canadian dollar's woes, the US dollar surged to six-week highs, supported by robust economic indicators and a shift towards safe-haven assets as investors adopted a risk-averse stance amid escalating tensions in the Middle East. This environment further exerted pressure on the loonie.
On Monday, October 7, the USDCAD rose by 0.0035 or 0.26% to 1.3610, up from 1.3575 in the previous trading session. Ahead, analysts anticipate the Canadian dollar will stabilize around 1.36 by the end of this quarter, with projections suggesting a shift to 1.40 within the next 12 months.