USD/CAD has been trading relatively stable around 1.3500 for several weeks. Economists at Commerzbank analyze the pair’s outlook.
Loonie unlikely to appreciate further against the USD in 2025
Given the cautious stance of the BoC, we remain comfortable with our forecast of lower USD/CAD levels in the coming quarters. However, we have adjusted the levels slightly higher to reflect the new forecast from our economists, who no longer expect a US recession.
However, we no longer expect the CAD to appreciate further against the US Dollar in 2025. The reason for this is that the Fed is likely to end its interest rate cuts earlier than the market currently expects and our economists anticipate very strong US growth. The Canadian economy is unlikely to be able to withstand this, even if growth there should also pick up again
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