Goldman Sachs has lowered its USD/CAD forecasts, citing resilient Canadian data, a supportive fiscal policy stance, and reduced expectations for BoC easing. While Canada's exposure to the US limits CAD's outperformance on the crosses, Goldman expects CAD to outperform USD over the rest of 2025.
Key Points:
First Signs of Trade War Impact Emerging:
Canada's latest payrolls report may mark the first evidence of the US-led trade war weighing on hard data outside the US.
BoC Defers to Fiscal Policy:
The Bank of Canada has emphasized fiscal policy as the primary tool to cushion against trade-related growth risks, limiting the need for aggressive monetary easing.
Stronger CAD on Net:
Less dovish BoC expectations and proactive government stimulus support a stronger Canadian dollar, especially versus the USD.
USD/CAD Forecasts Revised Lower:
New projections:
1.36 in 3 months (prior: 1.40)
1.35 in 6 months (prior: 1.39)
1.34 in 12 months (prior: 1.38)
Conclusion:
Goldman Sachs is increasingly confident in the Canadian dollar’s relative strength against the greenback, citing policy dynamics and early macro resilience. However, due to close US linkages, CAD may struggle to outperform broadly on the crosses.
This article was written by Adam Button at www.forexlive.com. Read More Details
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