Skip to content
Key Takeaways:
Limited relief rally predicted for Canadian dollar
Canadian dollar expected to remain under pressure
Global economic concerns impacting currency markets
Bank of Canada may need to cut rates further to support economy
Emerging-market stocks and currencies rallied
Developing-world stocks climbed the most since September
Greenback plunged
Trump postponed trade levies on Canada and Mexico
China had a measured response to the 10% tariff- BofA expects the Canadian dollar’s relief rally to be short-lived
- USD/CAD predicted to be above 1.45 in the near term
Tariff threats likely to persist until a new USMCA deal is negotiated- Canadian dollar worst-performing G10 currency in trade-weighted terms
- Risk-off sentiment a bigger driver of USD/CAD moves than interest rate differentials
- Bank maintains a long-term USD/CAD target of 1.35
Global Economic Concerns Impact Currency Markets
- The Canadian dollar is predicted to remain under pressure due to global economic concerns impacting currency markets.
- The Bank of Canada may need to cut rates further to support the economy amidst these challenges.
- Trump’s decision to postpone trade levies on Canada and Mexico has provided some relief but limited rally is expected for the Canadian dollar.
- China responded in a measured way to the 10% tariff, indicating a cautious stance in the midst of ongoing trade tensions.
Emerging Markets and USMCA Deal Impact
- Emerging-market stocks and currencies rallied, with developing-world stocks seeing their biggest climb since September.
- The Greenback plunged as risk-off sentiment played a significant role in currency movements.
- It is predicted that tariff threats will continue until a new USMCA deal is negotiated, impacting the performance of the Canadian dollar.
- Bank of America expects any relief rally for the Canadian dollar to be short-lived, with the USD/CAD rate predicted to be above 1.45 in the near term.
- Despite short-term fluctuations, the Bank maintains a long-term USD/CAD target of 1.35.