Consensus Canadian Dollar Forecast

August 9, 2022 | About

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USD to CAD: Current Price & Daily Updates

Value of USD in Canadian Dollars

  • CAD gains slightly vs USD on more upbeat market outlook July 27, 2022 Global markets have shifted to a more positive outlook after a gloomy close yesterday. A number of better-than-expected corporate earnings announced after the market closed along with relatively less extreme inflation number out of Australia, overnight, helped change the global economic outlook. Generally, positive economic outlook strengthens the Canadian dollar versus the USD dollar. The Canadian dollar vs. USD dollar exchange rate is currently sitting at 1.2877 or 0.7765 (CAD/USD)  Today’s Fed’s interest rate decision is expected at 2 pm EST.  Global markets have factored in a 75bp hike and it’s unlikely to see much reaction if the Fed sticks to the script. However,… 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

Daily UpdatesViews
July 27, 2022

CAD gains slightly vs USD on more upbeat market outlook

Global markets have shifted to a more positive outlook after a gloomy close yesterday. A number of better-than-expected corporate earnings announced after the market closed along with relatively less extreme inflation…
Canadian dollarDaily UpdatesViews
June 8, 2022

Is Canadian Dollar Strengthening or the US Dollar Sputtering?

With the Canadian dollar closing in on a 7-week high against the US Dollar it’s worth asking if it’s the Lonnie is gaining strength or the US dollar sputtering?   As…
USD to CAD Interchange FinancialDaily UpdatesViews
May 27, 2022

Canadian Dollar climbs to a 3-week high vs the US Dollar

The Canadian dollar gained strength from rising equity and oil prices and finished the week at a 3-week high against the US Dollar.  The US Dollar to Canadian dollar exchange…

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.

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