The Canadian dollar traded higher around 1.27 per USD to start 2021, extending a 2.1% gain in 2020, amid a general dollar weakness as bullish sentiment across global markets prompted investors to buy riskier assets. Forecast Tables and Statistics. Equally important for emerging-market currencies is the strength of the Chinese renminbi given the country’s economic heft. There are parallels between today’s environment and the years following the global financial crisis of 2008-2009 – a time when the yen rallied significantly. Perhaps most importantly, progress in addressing the risks of a Eurozone break-up have been very encouraging. Open a U.S. Bank Account Sign in to Exchange Money The solidarity shown among European nations in agreeing to a joint 750 billion-euro recovery fund will be rewarded with greater demand for European debt by long term investors, including the massive US$12 trillion collectively invested by global reserve managers. We remain cautious on the pound’s prospects for appreciation even if an agreement between the U.K. and EU is struck. Robinhood has removed all restrictions on purchasing stocks saying "There are currently no temporary limits to increasing your positions". The European Central Bank (ECB) has discussed the idea, though we doubt the governing council, which has historically been firm on its inflation target, would ever embrace above-2% inflation. While some point to weaker crude-oil prices as a headwind for the Canadian economy, we wonder whether this might be exaggerated. Monitor economic developments in some of the world’s largest countries including data on interest rates and currencies. Europe as a whole enjoys a healthier balance of payments, with trade surpluses that will be buoyed by stronger links to Chinese economic growth (Exhibit 7). The Japanese monetary and fiscal regime under new Prime Minister Yoshihide Suga will be important for the year ahead, and, since these policies were big drivers of yen weakness during the Abe administration, we will be watching for any changes in policy. For starters, Biden’s big-government policies are seen as dollar-negative in that they will boost fiscal deficits. The pound has rallied alongside these headlines, benefitting also from U.S. dollar weakness, and is reflecting more optimism than U.K. equities, suggesting the pound may be overvalued (Exhibit 9). Dogecoin price is trading inside a parallel channel on the 1-hour chart. Soft US jobs data has saved gold from further declines on Friday and XAU/USD is above $1800 again. What still concerns us about the outlook for the Canadian dollar is the fact that many Canadian-dollar negatives are being brushed off by investors. Yes, the oil patch still forms an important part of the Canadian economy, but much less than it used to. Canadian dollar. Forced to pivot, western provinces are now looking to participate in the global race toward net-zero emissions by 2050 and political support is building for hydrogen and natural gas as the saviours of western provinces. However, the currency could still experience a challenging end to 2020 before it embarks on a more sustained trend of appreciation, owing to short-term challenges facing the domestic and global economy. Finally, a return to normal might also involve faster population growth in the years to come, helping to shore up the economic growth rate as pent-up immigration materializes after borders are reopened. Presumably this time after four and a half years, the deadline is real. Either way, there will be a resolution to the Brexit saga in the few weeks that remain before the December 31 deadline. Leading up to President-elect Biden’s inauguration and through the 100-day period, emerging-market currencies will be the main beneficiaries of a weakening U.S. dollar. The lack of pushback against the U.S. dollar’s decline and the reluctance to follow the Fed down the inflation-stoking path indicates to us that the greenback has much further to fall (Exhibit 4). FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. Source: Bloomberg, RBC GAM. Maybe. Measures of economic sentiment such as purchasing managers’ indexes and economic-momentum indicators suggest that activity has taken a broad turn for the better across emerging markets. That’s the sobering picture painted by RBC Economics through Navigating 2021: 21 Charts for the Year Ahead. Coronavirus vaccination rollout is raising prospects of a swift economic recovery in the new year, although the pandemic is still far from controlled. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience and risk appetite. Note: As at Oct. 30, 2020. The economic improvement in emerging markets has not been limited to Asia. ... but improved performance could further propel Canadian equities. Canadian Dollar Forecast: On the Verge of a Bullish Breakout? USD/CAD remains in a consolidation phase as the pair extends sideways grind around 1.2750. The course of the pandemic will be key in determining the pace of euro gains. Note: As at Nov. 30, 2020. Stay in the know. Every quarter, the RBC GAM Investment Strategy Committee (RISC) develops a detailed global investment forecast. You will get notifications straight to your inbox when new publications are released. XAU/USD gains following soft US jobs report, DOGE defends critical support and heads towards $0.060, US Dollar Index challenges daily lows near 91.20. Source: Bloomberg, BOJ, MOF, RBC GAM. USD/CAD remains in a consolidation phase as the … FXStreet will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. Second, Biden’s friendlier foreign-policy stance offers relief to a market exhausted by combative tweets and will provide a boost to the countries that had attracted the most attention from the Trump administration. The Canadian dollar steadied around 1.27 per USD, close to levels not seen since April of 2018, as investors digest prospects of further economic stimulus in the US, lower oil prices and concerns over rising coronavirus infections and the economic impact of lockdowns around the world. There is only one critical resistance level that Dogecoin needs to pass. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. USD to CAD forecast for April 2021. Moreover, the rising fair value of the euro in our purchasing- power-parity model is a function of lower inflation in Europe than in the U.S., a trend that will likely accelerate given the Fed’s inflation-tolerant approach. Our 12-month forecast is for the British pound to remain at 1.33, which would see it weaken relative to other currencies as the U.S. dollar declines. The use of this website constitutes acceptance of our user agreement. High exchange rate 1.337, low 1.297. Our 12-month forecast is for the pound to remain at 1.33, which would see it weaken relative to other currencies as the U.S. dollar declines. Source: Statistics Canada, RBC GAM. With limited space to maneuver short-term interest rates, the Fed has been the first major central bank to indicate that it will allow, and even encourage, a period of higher than target inflation to make up for muted price changes in recent years. Shares in Gamestop (GME) are strong on Friday currently at $82.77. Our 12-month forecast is for the pound to remain at 1.33, which would see it weaken relative to other currencies as the U.S. dollar declines. Multiple daily strategies running 24/7 and FX expert guidance. The ongoing COVID-19 pandemic will not deter Canadian housing prices or sales activity from reaching new heights in 2021, according to RBC Economics.. Source: Bloomberg, PBOC, China General Administration of Customs, RBC GAM. A long range forecast for Canadian Dollar Exchange Rate and similar economic series is available by subscription. We have become more positive on emerging-market currencies and expect them to appreciate more than their developed-market peers in 2021. It also does not guarantee that this information is of a timely nature. This gap is a direct consequence of investors’ expectations that U.S. inflation will rise and has resulted in the U.S. now having one of the lowest real yields among G10 nations (Exhibit 2). A forward-looking analysis of Canadian, U.S. and international financial market trends including interest rate and currency forecasts. Bank Canadian Dollar Currency Forecast: 2021 US dollar and Canadian dollar Forecast Q1: 2021 US dollar and Canadian dollar Forecast Q2: Scotia Bank Forecast* 1.30: 1.30: BMO Bank Forecast: 1.28: 1.27: CIBC Bank Forecast: 1.30: 1.32: TD Bank Forecast* 1.27: 1.25: National Bank Forecast: 1.29: 1.26 *Based on previous month. The USD to CAD forecast at the end of the month 1.317, change for March 1.2%. The currency broke above 1.20 per dollar recently from 1.07 in March, and we think it will continue to rally toward a seven-year high of 1.27 next year. Also, a variety of non-energy commodities, including metals, lumber and wheat, together make up nearly the same weight as oil in Canada’s exports. **Usually 2 doses per person. Moreover, Chinese currency strength (up 8% versus the dollar since June) allows emerging-market currencies to strengthen versus the dollar, diluting U.S. claims that they are actively holding down the value of their currencies. Source: MindOnTheMarkets, Bloomberg, RBC GAM. We think the reason lies in the fact that shorter-term themes such as the pandemic, Brexit and U.S. political uncertainty have left investors shying away from shorting the dollar. Our view on the Canadian dollar has become more positive this year as we assumed the peak in the U.S. dollar had passed once the safe-haven flows of March subsided. Note: As at Oct. 30, 2020. Bloomberg, BOC, Macrobond, S&P Dow Jones, RBC GAM, Note: *Consists of advanced purchases and additional purchase Moreover, the recent announcement of highly effective vaccines should lift consumer and business confidence. Levels for CAD/JPY, USD/CAD 2021-01-25 16:15:00 Christopher Vecchio, CFA , Senior Strategist Here is a complete, in-depth US Dollar to Canadian Dollar (USD/CAD) outlook and forecast for 2021. As these tensions ease, longer-term factors will prevail in the market narrative, and investors will likely have more conviction in selling the dollar. Forecast of the US Dollar to Canadian Dollar (USD/ CAD) for 2022 . Rate target in 14 days: 1.296. As the year progresses, however, we expect the US dollar will start to regain ground with markets likely to look for the Federal Reserve to pare back stimulus ahead of other central banks, including the Bank of Canada.”. U.S. twin deficits and the Fed’s intention to boost inflation, coupled with economic and political improvements as well as extraordinarily easy financial conditions abroad, should cement that U.S.-dollar downtrend. Get updated information & news daily on exchange rates! And yet, major equity indexes are strongly positive this year. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. Latest Report: Rising COVID cases make for a challenging start to 2021 A report released in October by the Province of Alberta outlines a plan for large investments, incentives and partnerships to reposition the economy and capitalize on new opportunities in this area. The country’s balance of payments, with a decade of trade deficits and direct investment outflows, is a third cause for concern (Exhibit 13). Political crises such as negative publicity around Prime Minister Trudeau’s ties to a charity and his government’s efforts to bury what many are calling a scandal have hardly registered abroad. The Consensus Canadian Dollar Forecast predicts short & long term fluctuations of USD & CAD. Fixed income. RBC predicts big stock gains in 2021 - but it comes with a catch Story continues below advertisement RBC Capital Markets is out with its forecast for … FXStreet has not verified the accuracy or basis-in-fact of any claim or statement made by any independent author: errors and Omissions may occur.Any opinions, news, research, analyses, prices or other information contained on this website, by FXStreet, its employees, partners or contributors, is provided as general market commentary and does not constitute investment advice. Information on these pages contains forward-looking statements that involve risks and uncertainties. The surge in demand for the yen is also reflecting foreign appetite for yen-denominated assets. A stronger Chinese currency acts to improve the competitiveness of China’s trading partners because China accounts for an increasing percentage of their trade. We have just been through an unimaginable year. Source - RBC Global Asset Management; data as of Nov 2020. Combining data from Statistics Canada and its own internal forecasts, it said the Canadian economy a low in Q2 2020, mustering just 86.6% of real GDP relative to Q4 2019. Note: As at Oct. 13, 2020. You can change your location here. We are bullish for several reasons: Note: As at Oct, 31, 2020. Learn more about Cross-Border Banking. We are also waiting to see how Japan-U.S. relations proceed after Biden’s inauguration in January. January 8, 2021 Interest rates (%, end of quarter, ) Exchange rates (end of quarter) Forecast Forecast 20Q1 20Q2 20Q3 20Q4 21Q1 21Q2 21Q3 21Q4 22Q1 22Q2 22Q3 22Q4 2019 2020F 2021F 2022F Canada Indeed, in the eight months since the end of March, real yields in the U.S. have fallen to negative levels even as nominal 10-year yields rose. Canadian Dollar Update, February 4, 2021 – Canadian Dollar resisting a retreat USD/CAD Open: 1.2806-10, Overnight Range: 1.2779-1.2823, Previous … You should be aware of all the risks associated with foreign exchange trading and seek advice from an independent financial advisor if you have any doubts. As at Nov. 30, 2020. US Dollar to Canadian Dollar forecast for March 2021. ECB President Christine Lagarde hardly mentioned the currency at an October 29 press conference, lowering the odds that she would try to talk down the euro as readily as her predecessors did (Exhibit 3). Current Exchange Rates; February 01, 2021: Currency Exchange Rate; Japanese Yen to Dollar: 104.95: Euro to Dollar: 1.206: U.K. Please read our privacy policy and legal disclaimer. Foreign purchases of Canadian stocks and bonds have temporarily pushed this structural problem to the back burner. China’s willingness to relax its grip on this market is particularly noteworthy given the ever growing capital flows into China resulting from the inclusion of Chinese assets in major global bond and equity indexes. Investment outlook for your 2021 portfolio. Canadian Dollar Price Forecast: USD/CAD, CAD/JPY, EUR/CAD 2021-02-01 17:30:00 James Stanley , Senior Strategist Canadian Dollar, USD/CAD, CAD/JPY, EUR/CAD Talking Points: The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. The year ahead also brings additional political drama as Scottish elections raise the specter of the country’s exit from the U.K., should another referendum be called. ©Royal Bank of Canada. We expect that the yen will remain well-supported by capital inflows and forecast that it will strengthen to 99 per dollar in the coming year. Dec 01, 2020 | RBC Wealth Management . In this monthly webcast, Eric Lascelles, Chief Economist, RBC Global Asset Management, shares his latest views on the global economy and offers insight into today’s economic issues. The reality is that the pound has very few things going for it. One similarity is that deflation in Japan has returned, bolstering real yields and boosting the attractiveness of Japanese government bonds. Arguably, each of these risk factors are nearing resolution: COVID-19 vaccines are on the way, the U.K. and the EU are nearing an agreement on the U.K.’s exit, and President Trump is showing signs of allowing an orderly transition of power to President-elect Joe Biden. The U.S. political transition should also act to push up emerging-market currencies. While investors have begun to subscribe to our view and are buying the Canadian dollar, we don’t think that the currency’s recent strength necessarily reflects this newfound optimism. Following earlier new yearly peaks around 91.60, the US Dollar Index (DXY) lost some upside momentum and now tests daily lows in the 91.20/15 band. However, we note that some Canadian-specific concerns may prevent the currency from appreciating as much as the euro, the yen or emerging-market currencies during a broad U.S. dollar decline. This weekly update brings you the latest thinking from RBC Global Asset Management's Chief Economist Eric Lascelles. 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