CIBC Capital Markets expects the Canadian dollar to stay under near-term pressure as the Federal Reserve keeps tightening while the Bank of Canada holds rates steady, with USD/CAD projected to average 1.42 in the fourth quarter of 2026. The bank does not expect the BoC to follow the market's pricing for a rate hike this year, and while higher oil prices could lift Canadian headline inflation, CIBC expects that effect to be offset by economic slack created by trade tensions with the United States, forecasting Canada's unemployment rate rising to 6.6% in the fourth quarter. The outlook improves in 2027, when CIBC expects negotiations with the United States to lead to a rollback of Section 338 tariffs and a broader trade agreement, potentially supporting Canadian economic growth and allowing the BoC to raise rates early next year. CIBC forecasts USD/CAD at 1.37 by mid-2027, with its broader FX forecast putting the pair at 1.42 in Q4 2026, 1.39 in Q1 2027 and 1.35 by Q4 2027.
Canadian Imperial Bank Of Commerce
NVIDIA CorporationCIBC expects Fed tightening while BoC holds, keeping CAD under pressure and USD/CAD at 1.42.
