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CIBC Sees USD/CAD Trading Near 1.37 Into Mid-2026 Before Falling to 1.34 by Year-End

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CIBC Economics said in its Monthly FX Outlook it expects the Canadian dollar to remain range-bound against the U.S. dollar in the coming months, with USD/CAD likely to trade around 1.37 into mid-2026.

The bank said uncertainty tied to trade renegotiations and a weak underlying domestic economy are expected to weigh on the loonie, while a potential end to the war could see the broader U.S. dollar shed some of its safe-haven gains.

"That could leave USD/CAD in a trading range centred at 1.37 into mid-2026," CIBC Economics said. The pair was trading at a spot level of 1.3759, while the bank forecast USD/CAD at 1.37 for the second quarter of 2026 and 1.36 in the third quarter.

CIBC Economics added that as the market moves into the second half of the year, trade- and energy-related uncertainty could begin to dissipate, while parts of the Canadian economy may start showing signs of recovery.

The bank said it expects the Bank of Canada to "more forcefully guide towards the beginning of a hiking cycle," while the U.S. Federal Reserve could reconsider rate cuts again.

"Rate divergence should take USD/CAD lower towards 1.34 by end of year," CIBC Economics said.

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