Canadian Dollar Forecast, live rate and trend data
USD to CAD Forecast
The rising of COVID-19 cases has affected the entire world. But this did not stop the CAD from being the best-performing currency. It was projected that on the 23rd of January, the exchange would be 1 USD to 1.259 CAD. Canada is continuously recovering from the damages of the pandemic in its economy.
On the other hand, the USD is performing poorly economically. The threat of the new COVID-19 variant is to be blamed for this. This caused companies to halt hiring new employees and created less than half of the expected jobs. Meanwhile, everything is doing good in Canada economically.
According to data, Canada made almost twice as many jobs as predicted for December despite the threat of the new COVID-19 variant. The difference in the economic status of these two countries resulted in the fall of the exchange rate between USD to CAD to nearly its lowest rate in seven weeks.
However, because the Omicron wave is now hitting Canada, there is a good likelihood that the country will feel its effects as it did in the United States - particularly in terms of job openings since many stoppages in the country were initiated only a few weeks ago.
Is the Canadian Dollar going up?
There are many setbacks that the pandemic has brought to the world. Despite that, economists still expect an increase in the Canadian Dollar. This is due to the opening of many businesses and the borders of several countries, resulting in economic revival. However, because the Covid-19 era is still ongoing, the Federal Reserve will continue to raise interest rates, resulting in minimal profits.
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When will the Canadian Dollar rebound?
The Canadian currency rose when concurrent job statistics revealed that the Canadian economy outperformed forecasts while the US economy underperformed. Hiring in the United States appears to have halted in December due to the Omicron effect. The number of jobs produced in the United States was less than half expected. Despite Omicron, Canada created nearly twice as many jobs as projected for December. As a result of this news, the USD/CAD exchange rate fell to near its lowest level.
Even though Canadian core inflation is higher than projected, the Canadian Dollar is now stable against key currency pairings (4 percent vs. expected 3.5 percent). Despite rising commodity prices supporting Canadian dollar growth, a strong US dollar stopped bears from gaining traction below the 1.250 handles.
Given that prices are still stuck in a tight range, next week's event risk could act as an additional catalyst for price movement if actual results differ from expectations. In addition, the Federal Reserve and the Bank of Canada are expected to make interest rate decisions, which might impact pricing if there are any surprises.
Even though Canadian core inflation is higher than projected, the Canadian Dollar is now stable against key currency pairings (4 percent vs. expected 3.5 percent). Despite rising commodity prices supporting Canadian dollar growth, a strong US dollar stopped bears from gaining traction below the 1.250 handles.
Given that prices are still stuck in a tight range, next week's event risk could act as an additional catalyst for price movement if actual results differ from expectations. In addition, the Federal Reserve and the Bank of Canada are expected to make interest rate decisions, which might impact pricing if there are any surprises.
Why is the Canadian Dollar going up?
While COVID-19 remains a threat in practically every part of the world, it appears that it is no longer a major worry in Canada. With that said, the rebound of the Canadian Dollar is underway. This fact may confuse you because, after all, why is the value of the Canadian Dollar improving while the whole world is still struggling from the virus and its new variant. It would be best to understand the factors that affect the Canadian Dollar's value to answer that question.
Inflation
In recent months, inflationary pressures have emerged on both sides of the border. So far, central banks have dismissed inflation as a fad and not a reason to reduce support sooner than projected. However, inflation estimates have frequently surprised the upside and have shown to be more persistent than some predicted. Because of Canada's open economy, it will inevitably import US inflation. In general, a higher inflationary environment means a lower Canadian dollar.
Geopolitics
Geopolitical events have always influenced the USD/CAD exchange rate. They are particularly crucial today, as the world emerges from the pandemic into an unknown global climate. Tensions between China and the US not only exist but are increasing. Geopolitical issues that impede international commerce are typically destructive for the Canadian currency. Still, those that enhance oil prices are optimistic.
COVID Variants
COVID has proven to be more tenacious and lethal than anyone could have predicted. The progress of vaccination efforts worldwide and the dissemination of Covid variations among vaccinated and unvaccinated populations will significantly impact economic activity. The greater the potency of the varieties and the greater the risk they represent to economic activity, the greater the desire for risk havens such as the US dollar. Hence, the lower the Canadian Dollar.
Oil Price
Oil prices have recovered to levels well above pre-pandemic levels. The Canadian Dollar is once again a crucial component pushing the currency. Oil prices and the Canadian currency have likewise reverted to pre-pandemic levels. The Canadian Dollar rises in value when oil prices rise.
Shape of Recovery
The shape of the recovery was a source of debate early in the pandemic. That question has now been answered. Almost every measure of economic activity is approaching or has already surpassed pre-pandemic levels. Indeed, we have outperformed the most optimistic economic recovery projections. While everything is going well in Canada, it is unclear how long the economic recovery will last—the greater the economic recovery, the stronger the Canadian Dollar.
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