The Hub: Canadian dollar reaches 14-month low, near 70 cents to the U.S. dollar—main driver is diverging interest rates, not CUSMA

"Karl Schamotta, chief market strategist at Corpay Cross-Border Solutions, argued the loonie’s weakness is more about the surging U.S. economy than domestic issues. “[It’s] more a story about the greenback’s strength than Canada’s failings—the loonie has actually outperformed many of its major counterparts this year.” The AI boom is pulling capital into the U.S., and investors have turned overwhelmingly bullish on the dollar. But he thinks markets have overdone it. The Fed tightening may have been excessive once tariff- and war-driven inflation impulses fade. “A divergence between the Fed and the Bank of Canada is fully priced into the loonie, along with a whole lot of bad news about the economy. That’s a big reason for thinking that it might outperform expectations,” Schamotta told The Hub in an email."

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