The Canadian dollar has recovered after hitting 14-month lows near 70 US cents earlier in July. The Federal Reserve kept rates unchanged at 3.50%-3.75% on July 29, and US nonfarm payrolls fell by 23,000 in July, far below the expected gain of 80,000. This combination pushed USD/CAD down toward 1.40, bringing the loonie to approximately 71.31 US cents. The interest rate gap between the US and Canada, exceeding 125 basis points, explains the Canadian dollar’s prior weakness.
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