Consensus Canadian Dollar Forecast

November 30, 2021 | About

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USD to CAD: Current Price & Daily Updates

Value of USD in Canadian Dollars

  • USD to CAD volatility continues after Omicron causes sell-off in Canadian dollar November 29, 2021 "Omicron" has quickly become a late entry for word of the year.  On social media, young people are already using it to refer to a negative surprise; "he is such an Omicron, he ruined the whole party."  As for the financial markets, they are attempting a partial rebound from Friday's sell-off.  Part of the reason for the modest rebound is that initial indications are that while the variant is much more transmittable, its symptoms may in fact be relatively mild.  That observation was made the South African doctor who first noticed its spread.  On Friday, the value of USD to… Read More ...

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Views on USD to CAD

The defining social and economic event of the last year and a half has been the COVID-19 pandemic. The risk of the virus is now receding in Canada, though it remains a potent challenge in much of the rest of the world. Similarly, the economic recovery in Canada and the US is quite advanced while it remains at various stages in other parts of the world. Here is what is now driving the value of the Canadian dollar.

  • The shape of the recovery. Early on in the pandemic, the debate was about the shape of the recovery; will it be a V-shaped or U-shaped recovery? That question has been definitively answered. In almost all measures of economic activity, we are approaching, or are already, above pre-pandemic levels. Indeed, we have exceeded the most optimistic scenarios for economic recovery and the “reflation trade” has been a key theme to the financial markets for the last several months. What remains to be seen now is whether the acceleration of economic activity will continue or whether we are in for a long slog for the last mile of recovery. The more robust the economic recovery the higher the Canadian dollar.
  • Inflation. Inflationary pressures have surfaced on both sides of the border in the last few months. So far, central banks have generally dismissed inflation as transitory and not a reason to pull back on stimulus sooner-than-expected. But inflation figures have consistently surprised to the upside and proven more persistent than some anticipated. Given Canada’s open economy, US inflation will invariably be imported into Canada. Generally, a more inflationary environment will mean a lower the Canadian dollar.
  • Fiscal and monetary stimulus. Central banks and governments around the world have already started pulling back on the huge monetary and fiscal stimulus which was designed to address the economic stoppages resulting from the pandemic. The Bank of Canada and the Government of Canada were amongst the most aggressive in their stimulus programs. The Bank of Canada has also been the most aggressive in pulling back its stimulus programs and projecting rate hikes in 2022. In fact, the Bank of Canada’s surprise hawkishness caused a two month rally in the loonie which only came to a stop when the US Federal Reserve also began signaling its own tapering. The more quickly the Bank of Canada moves to rein stimulus the higher the Canadian dollar. Conversely, the more the Fed signals an end to QE, the more the Canadian dollar will decline against USD. The end of fiscal stimulus in the form of programs like CERB and CEWS and CERS will have a huge impact on the Canadian economy and an unknown impact on the exchange rate.
  • The variants. Covid has been more persistent and more deadly than anyone expected. How the vaccination efforts proceed around the world and how Covid variants spread amongst the vaccinated and unvaccinated population will have much to say about economic activity. The higher the potency of the variants and the greater the risk they pose to economic activity, the greater appetite will be for risk havens like the US dollar and therefore the lower the Canadian dollar.
  • Geopolitics. Geopolitical developments have always impacted the USD to CAD exchange rate. But they are especially important now that the world is emerging from the pandemic into an unknow global environment. US/China tensions not only persist but are growing. Geopolitical tensions that disrupt global trade will generally be bearish for the Canadian dollar, though those that raise the price of oil will be bullish for the Canadian dollar.
  • The price of oil. Oil prices have rebounded to well past pre-pandemic levels and are once again a key factor driving the Canadian dollar. The correlation between oil prices and the Canadian dollar has also returned to pre-pandemic levels. The higher oil prices, the higher the Canadian dollar.
Canadian Dollar Forecast

USD to CAD Daily Updates

Omicron USD to CADDaily Updates
November 29, 2021

USD to CAD volatility continues after Omicron causes sell-off in Canadian dollar

"Omicron" has quickly become a late entry for word of the year.  On social media, young people are already using it to refer to a negative surprise; "he is such…
New Variant and USD to CADDaily Updates
November 26, 2021

USD to CAD surges as market reacts to the new variant

The new Covid variant first detected in South Africa is roiling the financial markets and has pushed up the value of USD to CAD to its highest level in 8…
US dollar and the Summer of 69Daily Updates
November 24, 2021

The US dollar and Bryan Adams’ “Summer of ’69”

We have been saying to expect volatility this week given the low volumes around the US Thanksgiving holiday and the last couple of days have proven the point.  Over the…
October 8, 2021

Are you looking to buy US dollars or transfer money to the US? The US dollar is at its lowest against the Canadian dollar since July

The Canadian dollar is up 0.8% today and trading at its highest level since July.  USD to CAD is currently down to 1.248 (CAD to USD is up to 0.801).  The Canadian…
Money Saving Tips
July 30, 2021

How to Get the Best Exchange Rate in Canada

Where Can I Get the Best Exchange Rate in Canada? If you're looking to convert the money in your bank account, send money overseas or visit another country, you need…
November 19, 2020

Is the Canadian Dollar Exchange Rate Going Up or Down?

Summary:  Our qualitative view of the Canadian dollar exchange rate is broadly in line with the Interchange Financial Consensus Forecast.  The Canadian dollar will be largely rangebound but strengthen modestly…

The IFC Consensus Canadian Dollar Forecast is based on the aggregation of forecasts by major Canadian and Global banks and trading houses. The methodology used to calculate the forecast takes into account, among other things, the historical accuracy of the forecaster as well as other factors deemed relevant. Short Term refers to forecast for the end of the current quarter. Long Term refers to the forecast for the end of next year. The IFC Canadian Dollar Consensus Forecast is updated periodically.

The contents of this site are for information purposes only, and represent the personal views of the authors. It is not intended in any way as a recommendation to trade, nor does it construe advice whether to buy or sell. No responsibility can be held arising from any loss following consideration of this information. For information specific to your situation you should consult your relevant advisor or investment, legal or accounting professionals. All exchange rate figures displayed on this website are based on interbank exchange rates. These are not trading levels and are for indicative purposes only. Information provided is believed to be reliable when posted. Interchange Financial Corporation (“IFC”) does not guarantee its accuracy and information may change without prior notice. IFC is not responsible in any manner for direct, indirect, special or consequential damages however caused, arising out of the use of this web site.