Canadian Dollar: Soft CPI delays recovery – TD Securities
TD Securities’ FX strategists Howard Du and Linda Cheng note that soft April Canada inflation and weak employment data should keep USD/CAD supported near 1.37 in Q2 2026. They argue BoC rate hike pricing for 2026 still has room to fall, with a more sustained USD/CAD downtrend only expected to develop in H2 2026 as Canadian data improve and USMCA risks ease.
USD/CAD stays supported before H2 downtrend
"April CPI surprised to the downside with inflation firming to 2.8% y/y as prices rose by 0.4% m/m, falling short of expectations (TD & market) for a larger acceleration to 3.1% y/y."
"The broad thaw across various core inflation measures alongside further improvement in measures of inflation breadth should allow the Bank of Canada to continue looking through the impact of higher energy prices at the June meeting."
"We expect USD/CAD to stay supported in the near-term and forecast the pair to be at 1.37 in Q2. Weak employment data and soft inflation data for April continue to suggest more sustained USD/CAD downtrend will only start to form in the second half of this year."
"The soft Canada inflation data further confirms our view that USD/CAD would stay supported on a 1.37-handle for the near-term. Near-term bearish drivers remain elusive for this pair, as we believe the BoC rate hike pricing for 2026 still has room to fall. We expect more sustained USD/CAD downtrend to form in H2 2026, when economic data for Canada show more decisive signs of improvements and USMCA uncertainty starts to wane."
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
You may also like
Nebius Q3 results exceed expectations, capital expenditure rises to $27 billion, ARR target postponed, stock falls over 14% pre-market | Earnings Report Insights
Nebius reported Q3 revenue of $981 million (a year-on-year increase of 571%) and adjusted EBITDA of $466 million, both exceeding expectations. However, the company delayed and lowered its guidance for annual recurring revenue (ARR), stating that it is no longer applicable. Additionally, it significantly raised its 2026 capital expenditure target to $27 billion, with projections to further increase to $40 billion to $45 billion in 2027. The stock price plummeted more than 14% in pre-market trading.
AUD/USD Price Forecast: Breakdown of H&S pattern keeps the pair under pressure
U.S. Stock Market Preview | Major Index Futures Mixed; Nvidia Plunges Pre-market; Fed Officials' Speeches Incoming
Before the U.S. stock market opens on Thursday, November 12, the three major U.S. stock index futures showed mixed movements.
XRP risks drop to $0.90 as analyst Diana warns of Wave 2 correction
Crypto prices
More
