With President-elect Trump and a Republican-controlled Senate—and likely, the House of Representatives—the anticipated Trump economic boom is expected to amplify. The initial market reaction drove the U.S. dollar to multi-year highs against the Canadian dollar. However, as of Thursday morning, ahead of the Federal Reserve’s interest rate decision, market euphoria had tempered, allowing the Canadian dollar to stage a slight comeback.
As detailed in David Rosenberg’s article in The Globe and Mail, a definitive Trump victory, like Tuesday’s result, could spell trouble for the Canadian dollar. Anticipated changes to everything from corporate tax rates to trade tariffs are expected to favor U.S. economic investment over Canada, reducing the Canadian economy’s appeal to investors.
These pro-American changes are being implemented in an environment where the U.S. economy is already showing resilience, while the Canadian economy continues to face challenges despite notable rate cuts by the Bank of Canada (BoC).
Canadian Dollar Forecast:
As observed on Thursday morning, the USD/CAD pair is expected to encounter strong resistance around the 1.40 level, which could support the Canadian dollar (CAD) if this range holds. However, any sustained move above 1.40—driven by further signs of a weakening Canadian economy or a strengthening U.S. outlook—could push the USD/CAD rate into the low 1.40s or higher.
The Canadian dollar is currently trading at 1.3866 CAD against the US Dollar.
