US Dollar/Canadian Dollar FX Spot Rate

CIBC Capital Markets expects the Canadian dollar to stay under near-term pressure as the Federal Reserve keeps tightening while the Bank of Canada holds rates steady, with USD/CAD projected to average 1.42 in the fourth quarter of 2026. The bank does not expect the BoC to follow the market's pricing for a rate hike this year, and while higher oil prices could lift Canadian headline inflation, CIBC expects that effect to be offset by economic slack created by trade tensions with the United States, forecasting Canada's unemployment rate rising to 6.6% in the fourth quarter. The outlook improves in 2027, when CIBC expects negotiations with the United States to lead to a rollback of Section 338 tariffs and a broader trade agreement, potentially supporting Canadian economic growth and allowing the BoC to raise rates early next year. CIBC forecasts USD/CAD at 1.37 by mid-2027, with its broader FX forecast putting the pair at 1.42 in Q4 2026, 1.39 in Q1 2027 and 1.35 by Q4 2027.

Canada's C$27.6 billion retaliation against U.S. imports took effect on Tuesday, putting the Canadian dollar and North American supply chains under fresh pressure as investors assessed the risk of a widening trade war. The tariffs, covering more than 700 U.S. products, add uncertainty for manufacturers and consumers while keeping the loonie vulnerable. USD/CAD jumped 0.27% to 1.3876, the loonie's weakest since August 19, and futures traders priced in higher odds of a Fed rate hike. Copper prices hit an all-time high, with LME copper futures at $14,694 per ton, and Freeport-McMoRan stock rose 7.4%. Canada's Ivey PMI jumped to 64.3, but employment fell by 41.7K jobs and unemployment stayed at 6.4%, while U.S. core PCE inflation remains sticky at 3.3%.

President Donald Trump on Sunday criticized the value of Canada's currency, opening a new front in an escalating trade dispute between the two neighboring countries. In a Truth Social post, Trump called the Canadian dollar imbalance with the U.S. unacceptable, though he did not specify actions. The Canadian dollar recently traded around 72 U.S. cents. This follows the collapse of trade negotiations in August, after which Washington imposed 50% tariffs on about $20 billion (C$27.6 billion) of Canadian products, and Ottawa announced matching levies on U.S. goods, effective Sept. 8. Canadian Prime Minister Mark Carney insists any deal must prevent unilateral U.S. tariff changes on autos, steel, and aluminum. Trump's focus on the exchange rate adds uncertainty for investors, potentially signaling demands for a stronger loonie or further trade restrictions, affecting automakers, metals producers, and other cross-border industries.

The Canadian dollar weakened on Friday after a sharp drop in domestic employment contrasted with a stronger-than-expected U.S. jobs report, pushing the U.S. dollar higher and ending the loonie's recent run of gains. USD/CAD traded around 1.3862, up about 0.5% on the day, after dipping below 1.38 earlier. Canada's economy lost 41,700 jobs in August, versus expectations for a gain of about 15,000, while the unemployment rate held at 6.4% and the employment rate slipped to 60.8%. The U.S. added 162,000 jobs in August, with unemployment at 4.1%, reinforcing expectations that the Federal Reserve may be less urgent to ease policy. Analysts say the weak Canadian data pressures the Bank of Canada to stay accommodative, while strong U.S. payrolls support the Fed's higher-for-longer stance, widening the rate differential in favor of the dollar. The report also flagged risks from new U.S. tariffs on trade-sensitive industries.

The Bank of Canada held its key overnight rate at 2.25% on Tuesday, as expected, marking the seventh consecutive meeting without a change. In its statement, the central bank noted that new U.S. tariffs and Canada's retaliatory measures could push up business costs and gradually feed into consumer prices. While upside risks to inflation have increased, the bank expressed concern that tariffs add uncertainty to the economic growth outlook. With ongoing tensions in the Middle East, it reiterated its readiness to adjust monetary policy as needed.

Among the major economic indicators scheduled for release from August 31 to September 4, the focus is on the US August employment report. If it shows an improvement in the labor market, dollar buying is expected to continue in light of tightening monetary policy. The US employment report is due out at 9:30 p.m. on the 4th, with nonfarm payrolls expected to rise by 55,000 month-over-month, the unemployment rate at 4.1%, and average hourly earnings up 0.3% month-over-month. Also, the Bank of Canada is set to announce its policy rate on the 2nd, expected to hold at 2.25%. The US ISM non-manufacturing index is due on the 3rd, expected at 54.3. Canada's employment report is also due on the 4th, with payrolls expected to rise by 17,500 and the unemployment rate at 6.4%.

Canada's economy rebounded sharply in the second quarter, growing at an annualized rate of 3.3%, the fastest since 2023, after a revised 0.3% increase in the first quarter, according to Statistics Canada. The upward revision means Canada avoided a technical recession. The growth was driven by strong exports, which rose 3.6%, the biggest increase in over three years, and solid domestic demand, with household spending up 0.8% and business investment expanding 2.3%. However, a new 50% U.S. import tariff on $20 billion of Canadian exports, imposed by President Donald Trump, injects uncertainty into the outlook, though Canada has retaliated with counter-measures. The Canadian dollar weakened slightly to C$1.3856 against the U.S. dollar, and money markets expect no change in interest rates next week.

The Canadian dollar weakened on Wednesday, with the U.S. dollar rising against the loonie as renewed trade tensions with the United States and sticky U.S. inflation increased pressure on the currency. USD/CAD was last around C$1.3876, up 0.27%, after reaching an intraday high of C$1.3893 and a low of C$1.3836. The loonie earlier fell to C$1.3892 per U.S. dollar, its weakest level since Aug. 19, while the Canadian dollar was around 72.07 U.S. cents. The Canadian currency came under renewed pressure after U.S. inflation data showed price pressures remained elevated in July, strengthening the case for a Federal Reserve rate hike and supporting the U.S. dollar. Headline personal consumption expenditures inflation held at 3.7% annually, above the 3.6% expected, while core PCE remained at 3.3%. Both measures rose 0.2% from the previous month. The data adds to pressure on the Canadian dollar at a time when Ottawa and Washington are escalating their trade dispute. Canada has announced retaliatory tariffs on about C$27.6 billion ($20 billion) of U.S. goods after Washington imposed 50% tariffs on a similar value of Canadian imports. Canada announced C$27.6 billion ($20 billion) in retaliatory tariffs on U.S. goods on Tuesday, matching the value of new U.S. tariffs and targeting more than 700 products. The measures are due to take effect on Sept. 8. U.S. President Donald Trump escalated his rhetoric on Wednesday, saying it was "time to teach Canada you can't do this anymore," adding to uncertainty over whether the two countries can revive stalled trade negotiations. The Canadian dollar is also taking direction from broader moves in the U.S. currency. The dollar was modestly higher against major currencies on Wednesday as investors positioned ahead of U.S. personal consumption expenditures inflation data, which could influence expectations for Federal Reserve policy. The latest inflation figures could further widen expected interest-rate support for the U.S. dollar, particularly as markets reassess the chances of a Fed rate hike in September. Futures markets increased the probability of a September hike following the data, while inflation remains well above the central bank's 2% target. For the loonie, the combination of higher U.S. rate expectations and trade uncertainty presents a double headwind. Investors are also watching oil prices, given Canada's status as a major energy exporter and the currency's sensitivity to movements in crude.

BNY's Geoff Yu reports that Washington is considering further trade penalties against Canada after Ottawa's dollar-for-dollar retaliation to new U.S. tariffs. Canada plans to double counter-tariffs on U.S. steel and aluminum and add new duties on a range of goods.

EUR/CAD rose to around 1.6160 during European trading on Friday, snapping a two-day losing streak, after data from Destatis showed German industrial output exceeded expectations. The stronger-than-expected production figures supported the Euro, which held its ground against the Canadian Dollar. The currency cross maintained its intraday gains as the European session progressed.

Among the major economic indicators released from August 3 to 7, the ADP employment report, a leading indicator for US nonfarm payrolls, and the ISM non-manufacturing index are expected to set the direction for the dollar. New Zealand's April–June quarter employment report, due on the 5th, is forecast to show a 0.3% quarter-on-quarter rise in employment and an unemployment rate of 5.3%. If the labor market holds firm, buying of the New Zealand dollar could intensify. The US ADP employment report for July, also on the 5th, is expected to show a gain of 75,000, slowing from the previous month. A weak result could trigger dollar selling on expectations of earlier rate cuts, while a solid reading would support dollar buying. Canada's July employment report, due on the 7th, is forecast to show a gain of 15,000 jobs and an unemployment rate of 6.5%. As it is released simultaneously with the US employment report, the reaction in the US dollar–Canadian dollar pair could be complex.

The USD/CAD pair edged higher during the Asian session on Friday, snapping a three-day losing streak that had taken it to its lowest level since June 17. The move came as the Canadian dollar retreated on sliding oil prices while the US dollar recovered on Federal Reserve rate hike expectations and Middle East risks.

The USD/CAD pair traded in positive territory near 1.4050 during the early European session on Thursday. The US Dollar strengthened against the Canadian Dollar on hawkish signals from the US Federal Reserve.

USD/CAD edged higher on Monday, paring earlier losses as the US Dollar rebounded after opening the week with a bearish gap. The Greenback initially weakened as a temporary pause in attacks between the United States and Iran improved risk sentiment.

The Canadian Dollar fell to a one-week low against the US Dollar on Tuesday. The USD/CAD pair gained positive traction for the second straight day, buying on the previous day's solid rebound from the 1.4000 psychological mark, which was its lowest level since June 17. The move was driven by divergent Bank of Canada and Federal Reserve policy bets and concerns over Trump tariffs.

TD Securities strategists say softer Canadian CPI data is lifting USD/CAD as rate divergence remains a key driver. They argue broad US dollar strength should limit USD/CAD downside below 1.40. Higher oil prices are seen as supportive for the Canadian dollar on crosses but not against the US dollar.

The dollar index rose 0.18% to 101.14, driven by safe-haven demand after renewed US-Iran tensions and expectations of further Federal Reserve rate hikes. Over the past week, the index gained 0.23% as missile exchanges and Strait of Hormuz tensions pushed oil prices higher, fueling inflation concerns. Minutes from the Fed's June meeting showed a few officials supported a rate hike, and markets now price a 62% chance of a September increase, up from 58% a week ago. The Canadian dollar edged up after Canada added 18,200 jobs in June and unemployment fell to a nearly two-year low, reducing the likelihood of a Bank of Canada rate cut. The Swiss franc fell 0.42% as the Swiss National Bank held its policy rate at zero, while the Chinese yuan was nearly flat, with losses limited by the People's Bank of China's midpoint fixing of 6.7972 per dollar.

The Canadian Dollar weakened against the US Dollar on Monday, with USD/CAD rising to near 1.4165 in Asian trading, snapping a four-day losing streak. The move came as the US Dollar strengthened amid lingering tensions over the US-Iran conflict, following a new wave of US strikes against Iran.

September Canadian dollar futures present a selling opportunity on further price weakness, with prices trending lower and recently hitting a contract low. A move below chart support at the contract low of 0.7043 would trigger a sell signal, targeting a downside objective of 0.6850 or below. Technical resistance for placing a protective buy stop is located at 0.7125. The U.S. dollar index is in rally mode amid expectations of a more hawkish Federal Reserve under new Chair Kevin Warsh, while the U.S. economy continues to show resilience.

Scotiabank strategists Shaun Osborne and Eric Theoret note that the Canadian dollar has been in a near straight-line decline since early May, driven by wider US–Canada yield spreads, as USD/CAD continues its grind higher.