CAD has drifted down against the U.S. dollar over the past few months. Three things are driving it, and none of them are new.

The Canadian dollar has spent the summer trading softer against the U.S. dollar, hovering in the low-70-cent range after touching higher levels earlier in the year. None of the individual drivers behind the move are surprising — it's the combination that's kept the loonie under pressure.

Three drivers, one direction

First is the interest rate gap. With the Bank of Canada holding at 2.25% while U.S. rates sit meaningfully higher, capital tends to drift toward the currency offering the better return, which puts steady downward pressure on CAD. Second is trade uncertainty — the back-and-forth over tariffs and countermeasures with the U.S. tends to weigh on the currency of the smaller trading partner more than the larger one. Third, oil prices, which usually support CAD when they rise, have been volatile this year on the back of the Middle East conflict, and that volatility has cut both ways rather than providing a clean tailwind.

What it means for your business

A softer dollar is a mixed bag depending on which side of the border your costs and revenue sit on. If you export to the U.S. or earn USD revenue, the exchange rate is currently working in your favour on conversion. If you import raw materials, equipment, or inventory priced in USD, your costs are higher than they'd be at a stronger CAD — worth factoring into supplier negotiations or pricing reviews if you haven't looked at it recently.

For businesses with meaningful exposure either way, it's also a reasonable moment to check whether a forward contract or hedging arrangement with your bank makes sense, rather than staying fully exposed to whatever the rate does next.