Forecasts for CAD to USD
The Canadian dollar (CAD) has recently come under pressure, trading at 90-day lows near 0.7055 against the US dollar (USD), which is 2.5% below its three-month average of 0.7236. Analysts attribute this decline to falling oil prices, a crucial factor for the CAD given its status as a commodity-sensitive currency. As oil struggles at 72.14 USD per barrel—2.4% below its three-month average—market sentiment suggests that continued weakness in oil could further undermine the CAD. With Canada being a major oil exporter and particularly reliant on the US as its primary market, softening oil prices will likely dampen demand for the CAD in the near term.
The market outlook has also been heavily influenced by the recent US election, where Donald Trump’s victory has strengthened the USD amidst expectations of pro-business policies, rising Treasury yields, and anticipated tariffs on imports from Canada and other trading partners. This has led economists to forecast further gains for the USD, particularly if the uncertainty surrounding trade policies persists. FX analysts view the tariff threats and heightened market volatility as significant drivers for both currencies, suggesting that CAD may remain susceptible to additional downward pressure unless oil prices recover or there is a shift in the broader risk sentiment instigated by US economic data. The confluence of these factors indicates that the short-term trajectory for the CAD to USD exchange rate may remain constrained, influenced heavily by commodity price movements and geopolitical developments.
