FICC Focus
Reasons to Believe in Better Canadian Dollar Fortunes: FX Moment
May 1, 2025
Jeremy Stretch, Chief International Strategist at CIBC World Markets, shares his insights on Canada's economic landscape. He delves into how recent tariff reductions are expected to boost the Canadian dollar's value and discusses the implications of new political leadership on fiscal policy. Stretch predicts a more dovish stance from the Bank of Canada in 2025, which, combined with credible expansionary measures, could bolster growth. He also highlights Canada's emerging appeal in a global context driven by de-dollarization and diversification of reserves.
17:58
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Quick takeaways
- The moderation of tariff negativity is expected to improve the Canadian dollar's prospects, potentially stabilizing it around 137 by year-end.
- Anticipated dovish policies from the Bank of Canada and expansionary fiscal strategies under Mark Carney may enhance long-term growth and currency appeal.
Deep dives
Prospects for the Canadian Dollar
The analysis suggests that the Canadian dollar is likely to improve due to the dissipating negativity surrounding tariff pressures. Recent discussions indicate that the detrimental effects on the Canadian dollar that were sparked by early 2023 tariff debates are beginning to moderate. With recognition from the U.S. of Canada's import role, particularly in oil, the stabilization of the Canadian dollar around 138 to 139 reflects this shift. Predictions point toward a gradual appreciation of the Canadian dollar, with potential values reaching around 137 by year-end, which indicates an overall positive outlook despite the modest degree of improvement.
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