The USD to CAD exchange rate has recently experienced notable movements, with current levels near 1.3571, representing a 1.7% decline from its 90-day average of 1.3811. Expert analysts note that the pair has traded within a stable range of 1.3571 to 1.4263. The U.S. dollar showed unexpected strength following positive jobs data, with non-farm payrolls rising above forecasts, coupled with a decrease in the unemployment rate. This data has bolstered expectations of sustained economic resilience in the United States, leading some forecasters to predict a further strengthening of the USD.
In contrast, while the Canadian dollar found some support from the strength of the USD, it faces pressure from fluctuating oil prices—a critical factor for Canada’s economy given its status as a major oil exporter. Recently, crude oil prices have seen significant volatility, trading at 68.80, which is 3.2% above its 3-month average. This upward trend in oil prices typically boosts the CAD; however, the impact has been somewhat muted by weaker oil demand, linked to broader concerns about economic growth and global demand.
Moving forward, market watchers emphasize the importance of interest rate policies from both the Federal Reserve and the Bank of Canada. The Fed's current stance on interest rates could draw investors to USD assets, further propelling its value against the CAD. Meanwhile, the Bank of Canada's recent pause in rate cuts has supported the CAD, but ongoing trade tensions and economic uncertainties, particularly with the U.S., pose challenges for sustained appreciation.
Forecasts indicate that upcoming economic data releases, such as the Canadian services PMI, will play a critical role in shaping the outlook for the CAD. If the data indicates continued economic contraction, analysts predict a struggle for the loonie to maintain momentum against the USD. The interplay of U.S. economic strength, commodity-driven trends, and geopolitical dynamics will remain crucial in determining the future trajectory of the USD/CAD exchange rate.