A Reuters poll reflected that the Canadian dollar may enter a holding pattern in coming months before notching moderate gains in a year. This was as recent signs of domestic economic recovery supporting the currency.
The median forecast of 34 foreign exchange analysts in Friday, 31 July to Wednesday, 5 August ’26 poll expected the Canadian dollar to be barely changed at 1.40 each U.S. dollar, or 71.43 U.S. cents. This was in 3 months, matching the forecast in a survey during last month.
Within 12 months, the Canadian currency was predicted to strengthen 2.6% to 1.366, when compared with 1.36 in the previous forecast.
Head of foreign exchange strategy at CIBC Capital Markets, Sarah Ying said that they expect USD-CAD to remain very rangebound. This was as trading activity over the summer months tends to be low profile. Besides this, a lot of the large catalysts that drove the currency market to move have since faded away.
Ying added that some of these catalysts include AI-related enthusiasm as well as the market’s sensitivity to the Middle East war besides U.S. tariffs. This was whilst the gap in economic performance between Canada & the U.S. began to close.
Canada’s economy grew 3.4% during the 2nd quarter. It marked its best quarterly performance in over 3 years.
Speculators have still raised their bearing bets on the Canadian dollar to the highest level amongst major currencies. Much of the short-position building came just before the U.S. announcing last month in July ’26, 50% tariffs on a wide range of Canadian goods.
A currency strategist at T D Securities, Howard Du said that interest rate differentials have become another significant driver of the Canadian dollar.
Du added that as it presently stands, the market continues to expect an imminent Fed rate hike potentially at the upcoming September ’26 meeting. This is whilst the BoC can afford to stay more patient.
