The USD to CAD exchange rate is currently range-bound.
The key drivers include:
- Interest rate differentials are shifting as the Federal Reserve is expected to cut rates multiple times in 2026, while the Bank of Canada maintains its policy rate, supporting the CAD.
- The U.S. dollar firmed recently as economic indicators suggested resilience, with near-term data influencing potential moves.
- Canadian economic health appears mixed, with factory data showing contraction, but employment gains recently provided a boost to confidence in the CAD.
In the near term, expect the USD/CAD rate to fluctuate within a defined range amid various economic signals.
Upside risks include a significant rise in oil prices, which tend to strengthen the CAD due to Canada's status as a major oil exporter. Conversely, increased fears of a U.S. economic slowdown could lead to further dollar depreciation, impacting the rate negatively.
