The Canadian dollar posted its best day in roughly four weeks and outperformed most of its Group-of-10 peers after voters in the province of Alberta rejected the idea of separating from Canada .
The Canadian dollar rose as much as 0.55 per cent against the United States dollar , the best day for the currency since Sept. 22 after about 76 per cent of Albertans voted in favour of remaining in Canada in a referendum Monday. The result is a victory for Prime Minister Mark Carney after a campaign that created divisions in Canada’s energy heartland. Voters rejected a ballot option to hold a binding referendum on independence as early as 2027.
“Alberta separation was a very low probability, but high impact event, so the Canadian dollar is outperforming slightly on the crosses today as we price out the tail risk of Canada losing its highest per capita GDP province,” said Noah Buffam, strategist at CIBC Capital Markets.
The loonie also drew support from expectations the Bank of Canada will raise interest rates at its Oct. 28 meeting. Overnight swaps on Monday put the odds of a hike at about 80 per cent, up from roughly 30 per cent a week ago. The shift comes after Statistics Canada reported that inflation ticked up to 3.1 per cent in September, and Bank of Canada business and consumer outlook surveys found households’ longer-term inflation expectations are rising.
Bank of Canada Governor Tiff Macklem said on Saturday that he’s seeing more evidence that higher oil prices are supporting economic growth in Canada , and expects the bank will have a higher inflation forecast at the end of the month. The bank has warned that it may need to raise rates if energy prices remain elevated and policymakers see further evidence of inflation pressures spreading to goods and services from higher gasoline prices.
Earlier this month, the Canadian dollar sank to its weakest level since April 2025 after a softer-than-expected reading of the nation’s labour market reduced the odds of an interest-rate increase.