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Canadian Dollar Weakens as Yield Spread Widens, Bank of Canada Seen on Hold, Says SocGen

BY MT Newswires | ECONOMIC | 07:14 AM EDT

07:14 AM EDT, 06/23/2026 (MT Newswires) -- The Canadian dollar weakened versus its US counterpart, driven by widening interest rate differentials, Societe Generale Economics said in a note on Tuesday.

A larger gap between two-year U.S. Treasury and Canadian government bond yields pushed the U.S. dollar higher against the Canadian currency, with the exchange rate up to a 14-month high of almost $1.42, wrote the bank in its note.

Markets showed little reaction to Canada's higher-than-expected May consumer price index print that was released on Monday, which saw annual headline inflation at 3.2% and core inflation remaining "well behaved" at 1.6%, said SocGen.

The Bank of Canada is seen keeping rates on hold for the "foreseeable future," according to SocGen.

MT Newswires does not provide investment advice. Unauthorized reproduction is strictly prohibited.

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In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.

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