08:21 AM EST, 11/08/2024 (MT Newswires) -- At around 72 cents US, the Canadian dollar (CAD or loonie) is flirting with two-decade lows against the "mighty" US dollar (USD), said Bank of Montreal (BMO).

Its biggest challenge is the wide gap in interest rates between the two countries, reflecting the large difference in

economic performance, with the United States growing more than twice as fast as Canada in the past year, noted the bank.

CAD has also been held back by long-standing competitiveness issues, such as sagging productivity and rising unit labor costs, stated BMO.

Facing uncertainty ahead of the 2026 review of the USMCA and possible tariffs on exports to the US, the bank expects

the currency to remain depressed for a while, before appreciating toward 74 cents US by late 2025 as the US dollar succumbs to Federal Reserve policy easing through next year.