USDCAD Upside Is Capped

UBS projects USDCAD will drop from current 1.38 levels to 1.35 by late 2026 as US dollar strength fades and the Fed transitions to rate cuts.

Key Takeaways

• 1.USDCAD is expected to decline to 1.35 by late summer as US dollar strength fades due to asset diversification and anticipated Fed rate cuts.
• 2.Canadian dollar appreciation is restricted by soft domestic activity, labor market weakness, and uncertainties surrounding USMCA trade negotiations.
• 3.UBS forecasts USDCAD to stay flat at 1.35 through June 2027, maintaining a sideways long-term trend.

Table of Contents

• Current USD strength to fade
• CAD upside remains limited
• Investment considerations
• CIO Forecast- USDCAD
• Global asset class preferences definitions
• Appendix
• Risk information

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