The Canadian dollar, also known as the loonie, remained stable on Monday, despite a drop in oil prices and inflation rates falling below projected figures. The currency’s performance was steadied close to a three-month high, as it traded virtually unchanged at 1.3775 per U.S. dollar or 72.60 U.S. cents. This stability came after the loonie touched its strongest intraday level since September 17 at 1.3746.

Canadian Inflation Rate

According to recent data, Canada’s annual inflation rate for November held steady at 2.2%, falling short of the anticipated 2.3% rate. The stability of this rate, which remained unchanged from the prior month, may have contributed to the strength of the Canadian dollar. The Bank of Canada’s preferred measures of core inflation, the CPI-median and CPI-trim, both saw a slight decrease, dropping to 2.8% from 3%.

“November’s inflation report underscored why the Bank of Canada has not seemed overly worried about inflation trends in recent months,” commented Leslie Preston, a senior economist at TD Economics. “Underlying inflation is still above the 2% target, but it is getting a lot closer in recent months.”

Bank of Canada’s Monetary Policy

Investors in the Canadian market have adjusted their expectations for future monetary policy changes. They are now pricing in about 23 basis points of tightening from the Bank of Canada next year, a decrease from the previously expected 35 basis points. This change in forecast comes after the Bank of Canada maintained its benchmark rate at a three-year low of 2.25% last Wednesday. The central bank also indicated a possible end to its monetary easing campaign.

Impact of Oil Prices

The performance of the Canadian dollar is often tied to the price of oil, one of Canada’s major exports. The price of oil dipped by 1.1% to settle at $56.82 a barrel. This change in price was influenced by a mix of geopolitical factors, including escalating tensions between the U.S. and Venezuela, concerns about oversupply, and the potential outcomes of a possible Russia-Ukraine peace deal.

Canadian Bond Yields

Canadian bond yields also experienced a shift, moving lower across the curve. The 10-year bond yield decreased by 3 basis points to 3.413%. At one point, it touched its lowest level since December 5 at 3.394%.

The Canadian dollar’s stability amidst these shifts in the domestic and global economic landscape underscores the resilience of Canada’s economy. As the country navigates inflation trends, oil prices, and other market factors, the performance of the loonie will continue to be a key indicator of its economic health.

Ethan Radcliffe

Ethan Radcliffe is a senior reporter and digital editor at The Toronto Insider, specializing in Canadian federal policy, GTA urban development, and national economic trends. With over a decade of experience in North American journalism, Ethan focuses on translating complex legislative and economic developments into clear, accessible reporting for Canadian readers. Ethan’s work emphasizes policy analysis, government accountability, and data-driven reporting, with a strong focus on how federal and provincial decisions impact communities across the Greater Toronto Area and beyond. He has covered infrastructure planning, housing policy, fiscal strategy, and regulatory changes affecting Canadian households and businesses. A graduate of Toronto Metropolitan University’s School of Journalism, Ethan brings expertise in investigative reporting, long-form analysis, editorial standards, and digital publishing best practices. His reporting is guided by verifiable sources, public records, and transparent sourcing. In addition to reporting, Ethan has experience in newsroom editing, fact-checking workflows, SEO-informed journalism, and audience analytics, ensuring stories meet both editorial integrity standards and modern digital discoverability requirements. Ethan is committed to objective, fact-driven journalism and adheres to established ethical guidelines, prioritizing accuracy, clarity, and public trust in all reporting.

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