Canadian Dollar Weakens a 12th Straight Session as the Rate Gap Widens
The Canadian dollar closed Thursday at 70.74 US cents, its twelfth consecutive session of weakening against the US dollar. Measured on the Bank of Canada’s daily average exchange rate series, which begins in January 2017 and runs to 2,428 observations through September 24, that ties the longest unbroken run in that series. One other stretch matches it: March 3 to 18, 2020.
The comparison is unflattering to 2020 in the only way that matters here. That run took USD/CAD from 1.3356 to 1.4496, an 8.54% move, during the COVID crash. This one has carried the pair from 1.3784 on September 8 to 1.4136 on Thursday, a 2.55% move. Same length, under a third of the violence. In loonie terms, 72.55 US cents down to 70.74, a 2.49% loss of purchasing power against the US dollar over twelve sessions.
That distinction is the finding. This is a grind rather than a panic, and a grind that nothing interrupts looks like a structural signal rather than a reaction to a shock. Here are the longest runs of consecutive USD/CAD increases in the series.
| Run | Sessions |
|---|---|
| 2026-09-09 to 2026-09-24 (current) | 12 |
| 2020-03-03 to 2020-03-18 | 12 |
| 2022-09-13 to 2022-09-27 | 11 |
| 2025-12-29 to 2026-01-09 | 9 |
| 2020-01-29 to 2020-02-10 | 9 |
Four separate eight-session runs follow those. What has not happened is a new low. Thursday’s 1.4136 is the weakest close for the loonie since July 13, 2026, when it printed 1.4145, and it sits short of this year’s weakest close of 70.25 US cents on June 24. Year to date the loonie itself is 2.82% weaker, from 72.80 US cents on January 2, which is a 2.90% move in the pair from 1.3737. The record here is the length of the streak, not the level it reached.
Oil rose on Thursday and the loonie fell anyway
Thursday put the run to the clearest test available. The November WTI contract settled at $94.61, up 2.66% from $92.16 on Wednesday, on Yahoo Finance settlement data. Reuters reported that Saudi Arabia intercepted six ballistic missiles fired by Yemen’s Houthis that day, thwarting attacks on the province of Taif and the Yanbu area on the Red Sea, and that US and Iranian negotiators remain far apart.
The loonie weakened regardless, from 1.4096 to 1.4136. Crude moved higher in the space of one session and the currency of an oil exporter did not follow it.
Thursday’s gain also came off a slide. The November contract settled at $100.75 on September 15 and $90.52 on September 22, a 10.2% drop over five sessions, so Thursday recovered part of a larger move rather than setting a new high.
For producers, the barrel that matters is the one converted into the currency they report in. The November contract at Thursday’s settlement, at the Bank of Canada’s daily rate, works out to $133.74 CAD, against $140.21 on September 15 and a low of $127.31 on September 22. That is where the weak loonie helps somebody. Between September 15 and September 24 the November barrel fell 6.09% in US dollars, from $100.75 to $94.61, but only 4.61% in Canadian dollars, from $140.21 to $133.74. A producer selling that barrel lost less than the screen price says, because it banks the proceeds in a currency that fell underneath it. That difference between the headline price and the realised one is one of the things that separates individual Canadian energy stocks from the commodity itself.
At this oil price, the loonie has no precedent since 2017
Screen every month since 2017 in which front-month WTI averaged $90 USD a barrel or more and ten of them come back. Thursday’s close is below all ten monthly averages for the loonie.
| Month | WTI monthly average | Loonie, monthly average, US cents |
|---|---|---|
| Feb 2022 | $91.63 | 78.64 |
| Mar 2022 | $108.26 | 79.00 |
| Apr 2022 | $101.64 | 79.19 |
| May 2022 | $109.26 | 77.81 |
| Jun 2022 | $114.34 | 78.04 |
| Jul 2022 | $99.38 | 77.27 |
| Aug 2022 | $91.48 | 77.39 |
| Mar 2026 | $91.00 | 72.90 |
| Apr 2026 | $98.06 | 72.72 |
| May 2026 | $98.51 | 72.87 |
The loonie’s monthly average in every month since 2017 when front-month WTI averaged $90 USD a barrel or more, against Thursday’s close. Source: Bank of Canada Valet monthly and daily average USD/CAD; Yahoo Finance front-month WTI.
Seven of the ten months are 2022, when the loonie averaged between 77.27 and 79.19 cents. The other three are March, April and May of this year, at 72.72 to 72.90. Front-month WTI has averaged $96.53 through the first 18 sessions of September, squarely inside the screen, and the currency is at 70.74. The comparison sets a single daily close against monthly averages, so read it as a rough position rather than like for like, and ten months starting in 2017 is a short sample. Within that sample there is no month where oil was this expensive and the dollar this cheap.
The rate gap is what the measurements point to
The variable that has moved in step is the shortfall in Canadian short-term yields against American ones. The spread between the Bank of Canada’s benchmark two-year bond yield and the equivalent point on the US Treasury daily par yield curve has gone from 86 basis points on January 2 to 145 at the last common close on September 23, where Canada yielded 3.40% and the US 4.85%. It touched 147 bp on September 21, the widest of 2026, against a narrowest of 81 bp on March 20. Over the same twelve sessions the loonie fell through, the gap widened 19 bp.
| Date | Canada 2Y | US 2Y | Gap |
|---|---|---|---|
| 2026-09-08 | 3.13% | 4.39% | 126 bp |
| 2026-09-18 | 3.32% | 4.76% | 144 bp |
| 2026-09-21 | 3.29% | 4.76% | 147 bp |
| 2026-09-23 | 3.40% | 4.85% | 145 bp |
The Canadian dollar in US cents against the US minus Canada 2-year government bond yield gap, 2026 to date. Source: Bank of Canada Valet daily average USD/CAD and benchmark 2-year bond yield; US Department of the Treasury daily par yield curve.
Across all 179 days in 2026 when all three series published, the loonie’s level and the two-year gap correlate at -0.83. On daily changes, that falls to -0.37. The honest reading is that the relationship is strong in level and much looser session to session, which is the shape of a slow repricing rather than a series of day-to-day reactions to the spread.
The long end says the same thing more quietly. The 10-year gap was 99 bp on September 8 and 115 bp on September 23, with the US 10-year at 5.18% on Thursday, up from 5.11% on Wednesday and a fresh 2026 high. Canadian yields did rise over the same stretch, with the two-year up 27 bp, but not nearly as far as American ones: yesterday’s piece found that Canada’s bond yields have absorbed less than half the US move. The rest of the adjustment has shown up in the currency.
What it did to a Canadian portfolio over the twelve sessions
| Sep 8 | Sep 24 | Change | |
|---|---|---|---|
| S&P 500, US dollars | 7,673.52 | 7,704.13 | +0.40% |
| S&P 500, converted at the Bank of Canada daily rate | 10,577 | 10,891 | +2.96% |
| S&P/TSX Composite | 36,123.10 | 35,706.50 | -1.15% |
| S&P/TSX Capped Energy index ETF (XEG) | $28.78 | $28.32 | -1.60% |
Index levels come from Yahoo Finance and the conversion uses the Bank of Canada’s daily rate. Over those twelve sessions a Canadian holding unhedged US large caps earned 2.96% in Canadian dollars while the index itself gained 0.40%. The currency did roughly seven eighths of the work. That same 2.96% runs in reverse if the loonie retraces, which makes the hedged versus unhedged choice the thing that decides whether a Canadian investor keeps a gain like that, and it is worth knowing how Canadian Depositary Receipts and the currency hedge handle that exposure before treating a US position as a pure equity bet.
The domestic side of the ledger did not benefit. The TSX Composite lost 1.15% over the same stretch, and XEG, the iShares ETF used here as a proxy for the sector rather than the sector index itself, lost 1.60%.
What is priced next
The Bank of Canada’s policy rate stands at 2.25% as of September 23, and the next decision lands on October 28. Montreal Exchange one-month CORRA futures settlements as of September 24 price 11.6 basis points of movement into that meeting, about a 47% chance of a hike. Before then, Statistics Canada publishes July GDP on September 29.
Every figure in this piece is as of the September 24, 2026 close unless otherwise stated.
Disclaimer: The content on bestcanadianstocks.ca is for informational and entertainment purposes only and does not constitute financial advice. Past performance is not indicative of future results. Always consult a qualified financial advisor before making investment decisions. Exchange rates are the Bank of Canada’s own daily and monthly average USD/CAD series (FXUSDCAD and FXMUSDCAD, which begin in January 2017), pulled from the Bank’s Valet API on September 25, 2026, latest observation September 24. Canadian benchmark 2-year and 10-year bond yields are Bank of Canada Valet series BD.CDN.2YR.DQ.YLD and BD.CDN.10YR.DQ.YLD, latest close September 23, and the policy rate is series V39079. US yields are the US Treasury’s daily par yield curve, latest close September 24; because the Bank of Canada publishes a day behind Treasury, every Canada-versus-US spread here is computed on a date both have published. Oil settlements are the WTI November 2026 contract from Yahoo Finance, the same contract on both sides of every daily comparison, while the multi-year screen of months averaging $90 USD or more uses front-month monthly averages. Index levels are from Yahoo Finance. October 28 rate pricing is from Montreal Exchange one-month CORRA futures settlements with spot CORRA from the Bank of Canada. The streak counts, the correlations, the spreads and the conversions into Canadian dollars are computed by us from those files, and both charts are drawn from the same Bank of Canada and Treasury feeds.
