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.
AI Snips
Chapters
Transcript
Episode notes
Peak Tariff Negativity Ends
- Peak tariff negativity for Canada likely ended early this year, easing pressure on the Canadian dollar.
- This suggests a gradual improvement in the Canadian dollar's value throughout the year toward 1.37 USD/CAD.
Bank of Canada Dovishness Ahead
- The Bank of Canada will likely ease rates to about 2.25% in 2025 to offset economic risks from tariffs and slower growth.
- This dovishness may weigh on the Canadian dollar but will be balanced by expected Fed rate cuts and weakening USD bias.
Carney's Fiscal Expansion Plans
- Mark Carney's leadership suggests more expansionary fiscal policy focusing on infrastructure and housing to boost Canada's growth.
- This fiscal impulse can improve Canada's economic outlook and reduce reliance on the US trade corridor.