The Canadian dollar is on track for its steepest monthly decline in nearly two years, despite stronger-than-expected domestic economic growth, as investors remain concerned about trade uncertainty and widening interest rate differences between Canada and the United States.
The Canadian dollar, commonly known as the “loonie,” weakened by about 2.9% during June, marking its sharpest monthly drop since October 2024. Analysts say the decline has been driven by lower Canadian bond yields relative to U.S. Treasury yields, making the U.S. dollar more attractive to investors.
The currency has also come under pressure ahead of the upcoming review of the Canada–United States–Mexico trade agreement (USMCA), with markets closely watching the outcome of the trade discussions. Ongoing uncertainty over North American trade policies has added to investor caution.
Economists note that although Canada’s economy expanded by 0.5% in April, outperforming expectations, global market conditions and trade-related concerns continue to weigh on the Canadian dollar. The Bank of Canada’s future interest rate decisions will also be closely monitored in the coming weeks.