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USD/CAD climbs for a sixth straight day as rate-gap bets rise
The Bank of Canada held its policy rate at 2.25% in September, while strategists flag the recent USD/CAD move as potentially stretched and watch Middle East developments for fresh catalysts.
USD/CAD extended its gains for a sixth straight day, trading around 1.4150 during Asian hours on Monday, as the Canadian dollar weakened. FXStreet attributes the move to expectations that the interest rate differential between the United States and Canada will widen further.
The report notes the expected rate gap could grow after the Bank of Canada kept its key policy rate unchanged at 2.25% in its September meeting. Strategists at Scotiabank say wider US-Canada spreads have been a headwind for the CAD over the past couple of weeks, leaving it under pressure versus the USD.
FXStreet also highlights a counterpoint from Scotiabank, saying the move in the currency pair may be somewhat stretched. The outlet adds that elevated oil prices can continue to support Canadian inflation, while traders look for new catalysts and monitor geopolitical developments in the Middle East.
According to FXStreet, market sentiment remains tied to the region after US President Donald Trump rejected Iran’s [request], with traders awaiting additional signals. The report emphasizes that investors are closely watching developments as they balance rate-gap expectations against other influences.