TORONTO: The Canadian dollar weakened to a two-year low against its US counterpart on Friday as the greenback notched broad-based gains ahead of the US presidential election and despite domestic data that showed factory activity growing at a faster pace.
The loonie was trading 0.1% lower at 1.3950 to the US dollar, or 71.68 US cents, after touching its weakest intraday level since October 2022 at 1.3953. For the week, the currency was down 0.4%.
“This looks to be a play with US dollar bulls wanting to push this thing (USD-CAD) to the topside should the election result suggest it should go in that direction,” said Michael Goshko, senior market analyst at Convera Canada ULC.
The loonie is expected to rebound against its US counterpart in the coming year as lower borrowing costs boost the domestic economy but the result of Tuesday’s election could unsettle the outlook, a Reuters poll found.
Republican candidate Donald Trump has proposed sweeping tariffs on imported goods. Canada sends about 75% of its exports to the United States.
Analysts say that tariffs and other proposed measures could boost US inflation, reducing prospects of Federal Reserve interest rate cuts. The US dollar strengthened on Friday against a basket of major currencies.
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