Canadian dollar falls to seven-month low on Fed hawkish shift

Investing.com -- The Canadian dollar weakened to a seven-month low against the U.S. dollar on Wednesday after the Federal Reserve signaled a more hawkish stance, boosting the greenback across currency markets.

The loonie USD/CAD traded 0.6% lower at 1.4075 per U.S. dollar, or 71.05 U.S. cents, after reaching its weakest intraday level since November at 1.4080.

The Federal Open Market Committee (FOMC), in its first decision under the leadership of new chair Kevin Warsh, maintained the federal funds rate at 3.50%-3.75%.

Separately, the FOMC’s updated Summary of Economic Projections (SEP), or dot plot, projected a federal funds rate at 3.8% at the end of 2026, revised upward from 3.4% in the previous dot plot in March. That implies a 25 basis point rate hike this year. New quarterly projections revealed nine Fed officials now expect a rate hike by the end of 2026.

The U.S. dollar climbed against a basket of major currencies. Oil prices settled nearly 1% higher at $76.79 a barrel, though the commodity has dropped nearly 10% since the start of the week. Gold was down 2% after the hawkish tone from the Fed.

U.S. President Donald Trump on Wednesday stated the new ceasefire agreement with Iran was not final and the war could resume if he is dissatisfied. Canadian retail sales data for April is scheduled for release on Friday. Economists forecast sales will rise 0.6% from March.

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