Canadian Dollar: Loonie rally pauses before fresh gains - NBC
National Bank of Canada's (NBC) Marion and Dahms highlight a strong Canadian Dollar (CAD) rally in Q3, driven by positive data and higher Oil and Gold prices, which pushed USD/CAD briefly below 1.38. They warn that new U.S. tariffs and trade uncertainty raise downside risks to Canadian growth.
The Canadian Dollar (CAD), or "Loonie," experienced a rally in the third quarter, propelled by positive economic data, stronger commodity prices, and hopes for easing trade tensions between Canada and the United States. The National Bank of Canada (NBC) noted that this rally pushed the USD/CAD exchange rate briefly below 1.38, before it rebounded again.
However, NBC cautioned that recent tensions in the Strait of Hormuz and renewed U.S. tariffs pose downside risks to Canadian growth, which could lead to a USD/CAD rebound toward 1.40. NBC expects the Canadian dollar to resume its appreciation, potentially reaching 1.33 by 2027, assuming successful Canada-U.S. trade talks.
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