According to recent analysis, the USD to CAD exchange rate is currently at 60-day lows around 1.3770, which is approximately 1.4% below the three-month average of 1.3963. This indicates a notable downtrend for the USD amidst mixed economic signals. The U.S. dollar has been under pressure following the Federal Reserve's dovish interest rate cuts and increasing jobless claims, with markets now betting on further rate cuts expected to begin in early 2026. Analysts suggest that this dovish outlook is likely to continue applying downward pressure on the USD, alongside a broader risk-on market sentiment that typically favors alternative assets over the dollar.
Meanwhile, the Canadian dollar benefits from recent economic data showing surprising growth in Canadian exports and a stronger-than-expected GDP growth rate of 2.6% in the third quarter. While rising oil prices—currently at $59.84 per barrel—offer support to the CAD given Canada's status as a major oil exporter, the loonie may still face volatility. With oil prices recently trading 4.5% below their three-month average of $64.44 and fluctuating within a 15% range, the loonie’s strength remains closely tied to the performance of commodities.
However, the Bank of Canada's recent rate cut to 2.25% could also pressure the CAD, despite its expansionary measures signaling an end to its easing cycle. The mixed signals from both U.S. and Canadian economies—softening growth in the U.S. contrasted with stronger export data in Canada—set the stage for potential fluctuations in the USD/CAD pair. Analysts emphasize monitoring forthcoming economic data, particularly U.S. inflation figures and further developments from the Federal Reserve, as these will influence the dollar's performance.
In summary, the ongoing weakness in the USD driven by dovish Fed expectations and mixed economic data, coupled with relatively stronger Canadian export performance and oil price support, suggests that the CAD could maintain its strength against the USD in the short to medium term. The currency landscape remains dynamic, impacted by both regional economic conditions and broader global market sentiments.
