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International

TSX Closer: The Index Gains as Gold Rebounds, Household Net Worth Climbs

The Toronto Stock Exchange closed with a gain on Friday as investors welcomed higher gold prices and assessed fresh data showing Canadian household wealth continued to grow in the first quarter despite volatility in financial markets.The S&P/TSX Composite Index closed up 266.39 points, or 0.77%, to 34,937.85, as strong gains in battery metals, base metals and financial stocks outweighed weakness in health care, technology and energy shares.Battery Metals Index led gainers, up 6.70%, with Base Metals, Industrials, Utilities, and Financial, up 2.21%, 0.60%, 0.07%, and 0.86%, respectively. Health Care led decliners, down 1.64%, with Information and Technology, down 0.99%, Telecom, down 0.12%, and Energy, down 0.48%.In commodities, gold traded sharply higher on Friday, rising off a seven-month low on expectations Iran is ready to sign a peace deal with the United States, promising to lower the high oil prices that have raised inflation and boosted the U.S. dollar and bond yields.Gold for July delivery was last seen up US$124.80 to US$4,238.80 per ounce after falling to the lowest since Nov. 20 a day earlier. The rise comes as U.S. President Trump on Thursday said he canceled planned attacks on Iran and said a peace deal with the country is near.For oil, West Texas Intermediate (WTI) crude fell for a second day on Friday, falling to the lowest in nearly two months on expectations the United States and Iran are near a deal to end their war and reopen the Strait of Hormuz. WTI crude oil for July delivery closed down US$2.83 to settle at US$84.88 per barrel, the lowest since April 17, while August Brent oil was last seen down US$3.11 to US$87.27.With the prospect of lower geopolitical tensions and a potential peace deal in sight between the United States and Iran, the US dollar (USD) sold off early Friday as the demand for safe havens cooled, said Rosenberg Research.Oil prices are responding to the possibility of a deal between the U.S. and Iran, as both Brent and WTI have pulled back by more than 4.0%, noted Rosenberg. The other currencies that are underperforming as things settle are the Canadian dollar and the Norwegian krone, two currencies that markets closely identify with oil price moves, stated Rosenberg.Beyond commodity markets, fresh economic data showed Canadian household wealth continued to grow in the first quarter despite volatility in financial markets. Household net worth rises in the face of volatile equity markets, said Statistics Canada in a statement on Friday.The net worth of Canadian households, the value of all assets minus all liabilities, rose 1.3% in the first quarter of 2026 to reach just over $18.6 trillion, as the value of both non-financial and financial assets increased in tandem. Following two consecutive quarterly declines, non-financial assets were up 1.1% in Q1, led by an uptick in the value of residential real estate. Financial assets increased by 1.3%.Household balance sheets added $148.0 billion in financial assets in Q1, and this gain was driven by net purchases of mutual fund units and higher valuations of domestic equities and investment funds amid easing valuations for foreign equity holdings, StatsCan noted.Meanwhile the seasonally adjusted stock of household credit market debt in Canada reached $3.25 trillion in Q1, the latest StatsCan data revealed. At the same time, the ratio of household credit market debt as a proportion of household disposable income increased for the sixth consecutive quarter, climbing by 0.9 percentage point to 179.6% in Q1. In other words, there was roughly $1.80 in credit-market debt for every dollar of household disposable income, the agency said.The household debt service ratio, measured as total obligated payments of principal and interest on credit market debt as a proportion of household disposable income, rose after two consecutive quarterly declines. The ratio finished Q1 at 14.75%, up from 14.68% in Q4 2025, as total debt payments rose 1.1% to outpace income, added StatsCan.The value of household residential real estate rose 1.3% to $8.47 trillion in Q1, despite a decline in real estate activity as measured by resales. According to the MLS House Price Index, the composite house price increased by 0.7% in the first three months of 2026; however, the number of resales declined by 8.4%. In contrast, StatsCan's New Condominium Apartment Price Index indicated that, since the first quarter of 2025, new condominium apartment prices have fallen by 5.9% in Toronto and by 2.9% in Vancouver. According to the Bank of Canada's Financial Stability Report, pressures in condominium markets, particularly in Toronto and Vancouver, have created challenges for condominium owners and investors.Besides, the household saving rate fell to 3.5% in Q1 as growth in disposable income (+0.6%) lagged that in nominal household spending (+0.9%). Households continued purchasing mutual fund shares in the first quarter of 2026, registering the third-largest acquisition (+$75.3 billion) on record and following the record-high investment in the fourth quarter of 2025 (+97.1 billion) StatsCan said. In 2025, households benefitted from record-high reinvested earnings through fund investment incomes and capital gains, while in the first quarter of 2026, households focused on record net investments in exchange-traded funds.Additionally, the Bank of Montreal (BMO) noted implications of the expected negative birth rate in the country. In Canada, demographic attention has been rightly focused on the massive influx and then capping of non-permanent residents, said BMO. However, a collapse in natural population growth has been unfolding in the background. Net births are expected to turn negative for the first time ever in 2028, stated BMO. That is, more Canadians will begin to pass away than will be replaced with new babies.According to the bank, there are many causes and many longer-term implications. Among the latter, the lower labor force and potential economic growth, lower break-even job growth rates, a role for artificial intelligence to drive more productivity, mounting stress on social security funding, and an evolving housing demand curve.

S&P/TSX CompositeS&P/TSX Composite$CXY$CAD$USD
Treasury

TSX Closer: Index Falls As Oil Slump Weighs On Energy Shares Ahead Of BoC Interest-Rate Decision

The Toronto Stock Exchange slumped Tuesday as a sharp decline in oil prices weighed on energy shares, while investors assessed mixed economic data, a wider Canadian trade surplus and the outlook for the Bank of Canada's interest-rate decision coming tomorrow.The S&P/TSX Composite Index closed down 67.05 points, or 0.19%, to 34,411.69, with sectors mixed over Tuesday's session.Energy led decliners, down 3.13%, while Health Care, Information and Technology, and the Base Metals were down 0.60%, 1.17%, and 0.54%, respectively. Battery Metals Index led gainers, up 1.53%, with Financial, up 0.97%, Utilities, up 0.32%, Industrials, up 0.35%, and Telecom, up 0.45%.In commodities, gold fell to at a six-month low on Tuesday even as the dollar weakened. The precious metal for July delivery was last seen down US$74.00 to US$4.289.40 per ounce, the lowest since Dec. 10. The price of the metal has dropped 7.7% over the past month as investors turn to the dollar to hedge against the threat of higher interest rates as inflation rises due to the high oil prices that have followed the U.S. war on Iran.Meanwhile in oil, West Texas Intermediate (WTI) crude oil fell 3.4% on Tuesday on calming tensions in the Middle East as Iran and Israel ended their missile attacks and U.S. President Trump said negotiations to end the war on Iran and reopen the Strait of Hormuz are in their "final throes". WTI crude oil for July delivery closed down US$3.10 to settle at US$88.20 per barrel, while August Brent oil was last seen down US$2.82 to US$91.43.On the economic front, Statistics Canada reported Canada's merchandise trade surplus with the world widened in April as exports outpaced imports. It widened to $2.7 billion in April from $1.8 billion in March, as exports rose 1.6% month over month, while imports edged up 0.3% month over month, said the country's statistical agency on Tuesday. This was the second consecutive monthly trade surplus, and the largest since January 2025, wrote Statistics Canada in a statement.The April surplus was roughly in line with a $2.50-billion consensus surplus provided by MUFG. Exports of energy products rose 9.7% month over month in April. This followed an increase of 23.4% in March. Both monthly increases were driven by higher prices, which continued to rise in April amid the uncertainty caused by the conflict in Iran, the agency added.The country's expanding trade surplus is helped not only by higher oil prices but also by an increase in export volumes, said CIBC. Total exports rose by 1.6% month over month, driven by energy products, food and autos. Export growth would have been stronger were it not for a pullback in the volatile gold trade, stated CIBC. Excluding the two volatile areas of energy and metal/non-metallic minerals, exports were up by 5.1% and total exports saw another solid increase in volume terms.Total imports edged up slightly in both nominal and volume terms. The solid increase in export volumes is positive for monthly and quarterly gross domestic product, although the strong advance estimate for April GDP will likely have already included most, if not all, of that information, added CIBC. The further gain in export volumes at the start of Q2, following a solid rise in March, will mean that net trade should be a positive for quarterly GDP and support a rebound in economic activity following two marginal contractions, the lender added.Recent trade data suggested that Canadian exports have largely recovered to pre-2025 levels, although still with some weakness in sectors hit hardest by United States tariffs. However, with tariff uncertainty remaining as CUSMA renegotiations drag on, further upward momentum will likely be limited in the near-term, CIBC noted.Looking ahead to monetary policy, Rosenberg Research said the Bank of Canada is expected to leave interest rates unchanged at 2.25% during Wednesday's policy meeting, with markets continuing to price in one 25 basis points rate hike before year-end.Besides the Canadian dollar) has been the weakest reserve currency in recent weeks, as Canada's deteriorating real growth profile, unfavorable Canada-United States two-year spreads, and declining bullion prices weigh on the currency, said National Bank of Canada. Full-time employment at a record high makes it hard to call Canada a recession story, but a sustained Canadian dollar rally will likely require Ottawa to secure a trade accord with the United States this summer, pointed out the bank.Meanwhile, fresh industry data pointed to continued softness in consumer demand, with Canadian vehicle sales remaining below year-ago levels. Canadian auto sales fell 0.6% month over month to 1.89 million units at a seasonally adjusted annualized rate in May, based on data from Omdia, said Scotiabank.The monthly selling rate has trended in the 1.85 million to 1.9 million annualized range since February, an improvement from the three months to January when sales averaged 1.75 million to 1.8 million but still below the two-million rate a year ago.

S&P/TSX CompositeS&P/TSX Composite$CXY$CAD
Mining & Metals

RBC Maintains 1.3500-1.3900 USD/CAD Trading Range

RBC Capital Markets said USD/CAD has been choppy over the past week amid ongoing Iran-related headlines and month-end flows, with the currency pair showing a muted reaction to Canada's latest GDP data.In its CAD Weekly Soundbites report, RBC said that if the U.S. and Iran were to agree to the 60-day memorandum of understanding, an initial selloff in the U.S. dollar on "risk-on" sentiment would further drag USD/CAD lower.Having said that, the bank noted that Canada's weaker-than-expected first-quarter GDP, albeit somewhat tempered by the revision-prone strong April estimate, reinforces that the Bank of Canada is likely to be on hold for the foreseeable future.RBC added that even if a deal were to be reached, the Federal Reserve is still likely to hold rates."This means U.S.-Canada rate differentials remain relatively wide in the coming months and the USD retains its status as a higher-yielder in G10 (i.e. not providing a clear reason to sell the USD apart from initial euphoria on any potential deal) - this acts as a floor under USD/CAD," RBC said.The bank added that the Canadian dollar also faces the upcoming USMCA Joint Review."We have been citing a trading range of 1.3500 to 1.3900 for the coming months. That continues to hold, but there is risk that we may have to shade that range higher," RBC said.George Davis of RBC Capital Markets said the rally in USD/CAD has stalled against resistance at 1.3869 after the daily RSI study moved to overbought levels."Nonetheless, prices will have to pierce trendline support at 1.3737 to just neutralize the topside risks that are present. Above 1.3869, an area of strong congestion at 1.3932 serves as strong resistance," Davis said.

$CXY$CAD$USD
Treasury

RBC On Key Things To Watch Next Week and Its Rates View

RBC Capital Markets said next week's key Canadian economic release will be the May Labour Force Survey on Friday, with its economists expecting employment growth and a modest decline in the unemployment rate.In its CAD Weekly Soundbites report, RBC said it expects a 25,000 increase in employment in May and a decline in the unemployment rate to 6.8% from 6.9% in April. "Near-term, the labour outlook is unlikely to worsen further, given trade-concentrated layoffs have likely bottomed out and recent weakness largely reflected longer job searches for new entrants," RBC added.Remaining economic slack, along with inflation around target, reinforces RBC's view for the Bank of Canada to stay on hold with rates for the rest of 2026.RBC noted other key things to watch for next week include first-quarter productivity on Wednesday and S&P PMIs, with manufacturing due Monday and services and composite readings due Wednesday. Senior Deputy Governor Carolyn Rogers is also scheduled to appear before the House Public Accounts committee on Monday, although RBC said no fireworks are expected given the proximity to the June Bank of Canada meeting.On monetary policy, RBC said the recent GDP print "further extends runway to hikes." The bank noted that the Bank of Canada flagged risk scenarios to both cuts and hikes at its April meeting, though its overarching message was one of comfort with where policy was positioned."Slight but meaningful slack in labour markets and the economy, combined with underlying inflation around the 2% target, provides little impetus for the BoC to move off the bottom-end of its 2.25-3.25% neutral range," RBC added.RBC said despite volatility during the week around Iran deal optimism and weak Canadian GDP data, Canada-U.S. bond spreads were little changed from the previous week, with the five-year spread at negative 108 basis points.On foreign exchange, RBC said that if the U.S. and Iran were to reach a deal, USD/CAD may have further room to sell off on a weaker U.S. dollar initially. However, it added that the U.S. dollar's status as a higher-yielder in the G10 and relatively wide U.S.-Canada rate differentials act as a floor under USD/CAD.George Davis of RBC Capital Markets said a "spinning top pattern" halted the move higher in Canadian 10-year yields near 3.70%, while the subsequent bullish trend reversal below 3.51% resulted in a false break to the topside. "A daily close below resistance at 3.43% would amplify the false break and shift the focus down to 3.39% and 3.36% initially, followed by 3.27%," Davis said. "Support is now located at 3.53% and 3.61%."

$CXY$CAD$USD
International

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

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.

$CXY$CAD$USD
International

RBC Capital Markets Says USD/CAD Bias Remains Skewed Toward Top End Of 1.3500-1.3900 Range

RBC Capital Markets said it expects USD/CAD to continue to trade within its expected range of 1.3500 to 1.3900 in the coming months, with the bias currently skewed toward the top of that range.In its CAD Weekly Soundbites report, RBC said there "isn't a clear reason to sell the USD," noting that the US dollar remains "a relatively high yielder in G10," while there are "consistent flows into US assets" and the greenback continues acting as a safe haven."That leaves the path of least resistance for the USD toward a drift higher in the near-term, putting upward pressure on USD/CAD," RBC said.The bank added that both the Federal Reserve and the Bank of Canada are on hold in the coming months, meaning "the relatively wide US-CA rate differentials are acting as a floor under USD/CAD."RBC also noted that Canadian investors remained net buyers of foreign securities, including US assets, in March, "albeit at a much slower pace than in the past several months."On technicals, George Davis of RBC said the break above "strong congestive resistance at 1.3728 argues for a greater correction toward secondary resistance levels at 1.3799 and 1.3869.""We continue to favour fading such rallies based on the broader downtrend that is in place," Davis said.He added that while initial support is located at 1.3728 and 1.3643, "prices will have to pierce a trendline at 1.3560 to reassert the downtrend.""Reassess on a daily close above 1.3932," Davis added.

$CXY$CAD$USD
International

RBC Capital Markets Expects April CPI To Accelerate; Says H2 BoC Hike Odds Exceed Chance Of Cut

RBC Capital Markets said Tuesday's April CPI report will be the highlight for next week, with the headline print likely to accelerate while broader price pressures should remain contained.In its CAD Weekly Soundbites report, RBC said it and consensus expect April CPI to rise 3.1% year-over-year, compared with 2.4% previously, as headline price pressures should escalate from higher energy costs.The bank added that retail sales data due Friday should show "firm gains" consistent with Statistics Canada's flash estimate of 0.6%, while excluding autos, retail sales could rise almost 1%."The consumer was resilient in 2025 (consumption growth +2.3%), particularly in the face of trade uncertainty and the massive population growth shock, and that momentum is carrying into Q1," RBC said.RBC said it sees the Bank of Canada on hold in 2026, with hikes in 2027, but added that "the chance of H2 hikes far exceeds the chance of a cut.""Market pricing for 2026 rate hikes edged higher (50bp priced in) this week and 10y bond yields jumped to the highest since 2024 on higher oil and global bond market dynamics," the bank noted.RBC added there are "inflation and growth cross-currents to manage" but said that "if push comes to shove the BoC will prioritize inflation, even if it means hiking into a squishy growth backdrop."The bank also said USD/CAD remains trapped in its expected 1.3500-1.3900 trading range for the coming months, with the bias "currently skewed towards the top of that range."On the global front, RBC highlighted next week's flash first-quarter GDP data in Japan, employment data in the UK and Australia, CPI reports in the UK and Japan, flash PMIs in the UK, Euro area and US, and UK retail sales. The Federal Reserve will also publish minutes from its April meeting, while Nvidia is scheduled to report earnings Wednesday.On technicals, George Davis of RBC said the break above "very strong support (3.62%) has prevented a potential triple top from forming and shifts the focus up to 3.71% and 3.78%.""The 2024 high (3.88%) serves as additional support. A return below 3.47% is required to nullify the topside risks," Davis added.

$CXY$CAD$USD
International

USD/CAD Likely To Remain "Trapped" In a Range-bound Environment In Coming Months, RBC Says

USD/CAD is likely to remain "trapped" in a range-bound environment in the coming months, with the pair seen trading between 1.3500 and 1.3900, RBC Capital Markets said in its latest FX View note.RBC added its end-of-second-quarter forecast for USD/CAD stands at 1.3700.The bank said Friday's Canadian and U.S. employment reports point to both the Bank of Canada and the Federal Reserve holding interest rates for now.Although, RBC noted, the Canadian employment series tends to be volatile, it said the latest print "pours some cold water on the possibility of a BoC rate hike in the short-term."Meanwhile, RBC said the "stabilizing" U.S. labour market further diminishes the risk of a near-term dovish Federal Reserve pivot, particularly as attention shifts to potential secondary-round inflation effects.RBC noted the outlook is also unfolding against the backdrop of the ongoing Iran conflict, "for which the path is uncertain.""As long as the USD is not experiencing a sustainable broad-based rally, this morning's Canadian data reinforce CAD's underperformance vs its commodity/higher yielding peers in the past month," the bank said.On technicals, RBC said last week's close below 1.3598 "reasserted the downtrend," suggesting that rallies are viewed as a selling opportunity. The bank noted USD/CAD was hovering around trendline resistance at 1.3674, with 1.3728 seen as the next resistance level. "If USD/CAD closes above the latter, then the risk is additional gains towards 1.3799 and 1.3856," RBC added.Support levels are seen at 1.3526 and 1.3482, according to the bank.

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International

Job Reports Not Enough To Take USD-CAD Out Of Its Range Bound Environment, RBC says

A softer Canadian jobs report today saw the unemployment rate up to 6.9% and resulted in a rates rally and curve steepening, RBC Capital Markets said in its latest CAD Weekly Soundbites note. But, the bank added, when that report is combined with the US labor report, that beat forecasts, it wasn't enough to take USD/CAD out of its range-bound environment.Canadian data also reinforced the Canadian dollar's underperformance versus its G10 commodity and higher-yielding peers over the past month, RBC said.On the Canadian economy, RBC noted the April jobs report showed a 0.2 percentage-point increase in the unemployment rate to 6.9%, with weakness evident in goods sectors, trade and transport/warehousing, though private-paid employment and total hours worked were little changed in the month.Looking ahead, RBC said next week will not feature key Canadian data releases, although there will be a number of second-tier reports including housing market data, wholesale trade on Thursday and manufacturing sales on Friday. "The softening labour market YTD has not translated to the product market, where Q1 GDP is tracking above-potential including the March nowcast," it added.The bank added that investors will also watch inflation data in Norway, New Zealand inflation expectations, U.S. producer prices, second-quarter GDP revisions in the euro area, U.K. first-quarter GDP, U.S. retail sales, and Japanese producer prices. RBC also noted that the Bank of Japan and Riksbank will release minutes from their latest meetings, while Norges Bank's Financial Stability Report is due Tuesday.On rates, RBC said the Bank of Canada's expected hold last week was delivered, although "the balance of changes tilted hawkish." The bank noted GDP growth is tracking in the 1.5%-2% range in the first quarter, which would result in a lessening of excess slack in the economy if realized in the full expenditure breakdown. RBC added improved labour market outcomes are expected as part of slack reduction over the year. "We maintain our long-held view: base case is the BoC on hold in 2026, with hikes in 2027, but the chance of H2 hikes far exceeds the chance of a cut."Meanwhile, RBC noted Government of Canada bonds outperformed their U.S. Treasury counterparts following the weaker jobs report, with the Canada/U.S. 10-year spread tightening 5 basis points to at -89 basis points from last Friday.On technicals, RBC said after yields failed to close above the key double top at 3.62%, the move back below a trendline dating to late February, now at 3.54%, "eases some of the topside risks.""This opens 3.43% and 3.39% next on the downside," RBC added.

$CXY$CAD$USD
International

USD's Weekly Coppock Curve "Still Nominally In An Uptrend" Vs CAD, "But It Is Peaking", says Rosenberg Research

Walter Murphy over at Rosenberg Research noted in a last comment in early April the U.S. dollar's weekly Coppock Curve was in a confirmed uptrend against the Canadian dollar and was on pace to remain constructive into the latter part of May. Five weeks on, the indicator is still nominally in an uptrend, but it is peaking, he said. More importantly, the greenback is currently a good deal below its early-April levels against the Canadian currency, "despite those seemingly favorable momentum conditions", he added.According to Murphy, April's promise was "overwhelmed" by the combination of the 2025-2026 resistance trendline and the lower reaches of C$1.402-C$1.417 chart resistance area. "Those two elements have clearly proven their mettle (again)," Murphy said.Murphy noted the greenback is currently in the middle of the C$1.375-C$1.340 support range, while the resistance line is now at C$1.385 and declining by C$0.001 per week. "At that rate, it will not challenge the upper portion of the support band until early July," Murphy said.The peaking Coppock indicator will likely enter a confirmed downtrend by the end of May, according to Murphy. However, he said, the resulting bearish bias may only continue for a relatively few weeks, "perhaps into late June or early July."Under those conditions, Murphy said there may not be enough time for the U.S. dollar to do much more than test the lower boundaries of the C$1.375-C$1.340 support area.He added the year-to-date lows in the C$1.353-C$1.348 range "would be expected to provide some intervening support."

$CXY$CAD$USD
International

RBC Sees USD/CAD Range-Bound In Near Term, Gradual Decline Longer Term

RBC Capital Markets in its CAD Weekly Soundbites (Rates & FX) note on Friday said an "event-rich" week "largely came as expected", with a "steady fiscal profile", the Bank of Canada delivering a "modestly hawkish hold" and first-quarter GDP "continuing to track above potential".The bank said the BoC's hawkish tilt reinforces its view for a gradual decline in USD/CAD in the long term. However, it added that recent BoC and Federal Reserve meetings suggest both will be on hold in the short term, leaving a range-bound bias on USD/CAD.In its rates view, RBC said the expected BoC hold was delivered this week, but the balance of changes tilted hawkish. The BoC modestly upgraded its GDP profile, noted the expected absorption of excess slack and said the neutral range discussion was slanted higher, even though the 2.25%-3.25% range was left unchanged.RBC said it maintains its long-held view that the base case is the BoC on hold in 2026, with hikes in 2027, but added that the chance of second-half hikes far exceeds the chance of a cut.On foreign exchange, RBC said this week's marginally hawkish BoC tilt reinforces its longer-run view for a gradual move lower in USD/CAD into next year, partly conditional on the BoC shifting to hikes in 2027, with risk in the second half of 2026.However, in the near term, the bank said it continues to see the pair range-bound, as central bank meetings suggest the BoC and the Fed are likely to be on hold in the coming months, keeping US-Canada rate differentials relatively stable. That should continue to act as a floor under USD/CAD, with the 1.3500 area seen as the bottom of the range.RBC added that a weekly close below 1.3598 has reasserted the downtrend in USD/CAD and favours a re-test of this year's lows at 1.3526 and 1.3482."Below there, the September 2024 low at 1.3420 would come into view. Initial resistance is located at 1.3598 and 1.3661, followed by 1.3728, with rallies to the latter two levels viewed as a selling opportunity," said George Davis, chief technical strategist at RBC Capital Markets.

$CXY$CAD$USD
International

Canadian Dollar Rebounding, Targets USDCAD At 1.33, Scotiabank Says

Scotiabank said the Canadian dollar is rebounding from recent weakness, supported by seasonal factors and positioning, despite earlier pressure from risk aversion and a stronger US dollar. USD/CAD was last seen around 1.3612.The CAD's correlation with crude oil prices has been negative through the duration of the Iran conflict so far, the bank noted."Instead, the CAD's mediocre performance through late March when spot peaked just below 1.40 reflected risk aversion and the broader bid for the USD," said Shaun Osborne, chief FX strategist at Scotiabank."USDCAD became severely overvalued (by our estimate of short-term spot equilibrium) through early April. But the combination of a very cheap CAD, the willingness of USD hedgers to take full advantage of gains towards 1.40 to sell and CAD-bullish seasonality in April (consistently the CAD's strongest month of the year versus the USD since the 1970s) is driving a steady rebound in the CAD," added Osborne.Scotiabank continues to target a 1.33 spot rate by year-end.

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International

Scotiabank Sees Bank of Canada Rate Hikes, Flags Inflation Risks And CAD Impact

Scotiabank said it is doubling down on its forecast for the Bank of Canada to begin tightening monetary policy over the second half of the year, citing rising inflation risks and stronger economic drivers.From 2.25% at present, the bank said it thinks the policy rate will rise to 3% by year-end.Scotiabank Economics has forecast hikes by the end of 2026 since last November. One more was added in March in response to supply chain and commodity shocks related to the war with Iran."The BoC just opened the door wider to a rate change." It said "... if the economy evolves broadly in line with the base case, changes in the policy rate can be expected to be small." But in which direction?" the bank said in its latest foreign exchange outlook."A rate cut scenario that hinged upon higher US tariffs against Canada was presented. It lacks credibility in our view. One reason is that it would prompt excessive easing of financial conditions. With markets priced for 50-75bps of hikes this year, a 25bp cut would strike that out, add the cut, probably price 1-2 more, and result in short-term market rates plunging by 100bps or more," said Derek Holt, Head of Capital Markets Economics.The effect would tank the Canadian dollar, driving more import price pressures, said Holt adding that the bank remains "cautiously optimistic" toward trade negotiations."A hike scenario was also presented by the BoC and conditioned on higher-for-longer energy prices. Yet it's not just energy prices as evidenced by the BoC's own measure. Canada is importing higher incomes through higher prices for many of the products it sells with trickle down effects into domestic incomes and more resulting spending. Smaller deficits driving increased federal spending represent one such example equal to 1/2% of NGDP this year and 1/4% next year; the BoC's communications did not have time to incorporate this added fiscal stimulus that further merits higher rates. Inflation risk has pivoted higher," noted Holt.

$CXY$CAD$USD
Mining & Metals

Scotiabank Sees Canadian Dollar Strength As USD Weakness Supports Outlook, Targets USDCAD At 1.33 By End-2026

Scotiabank continues to expect broad-based weakness for the U.S. dollar (USD) against all of the major developed economy currencies, supporting its outlook for a stronger Canadian dollar (CAD).The divergence in policy rate paths remains a core pillar of its fundamental outlook, the bank said in its latest foreign exchange outlook, adding that the USD outlook remains weak through the second half of 2026 and into the end of our forecast horizon at the end of 2027.Meanwhile, CAD continues to make "halting progress" toward Scotiabank's forecast targets as it continues to retrace its 2024-2025 decline.CAD made a fresh cycle high in early January, only to relinquish its early gains in the initial weeks of the US/Iran conflict that began in early March, said Eric Theoret, associate director for global foreign exchange at Scotiabank."The CAD's recent gains have delivered a meaningful narrowing in the discount (USDCAD premium) to our fair value estimate. Fundamentals argue for a stronger CAD, and we anticipate medium-term strength as markets shake off their conflict-related concerns,""The Bank of Canada forecast is also directionally unchanged, however the 75bps of cumulative tightening have been pulled forward into 2026 while leaving the terminal rate unchanged at 3.00%. Our USDCAD forecast is unchanged, and we continue to target 1.33 by the end of 2026 and 1.30 by the end of 2027," added Theoret.However, Scotiabank maintained that trade policy uncertainty remains a major risk into the July 1 review of the USMCA.

$CXY$CAD$USD
International

USD/CAD Range-Bound As Pair Holds Recent Ranges, RBC Says

RBC Capital Markets said USD/CAD is likely to remain range-bound in the short term, as this week's data and geopolitical developments were not enough to shake the pair out of recent ranges.The pair is nearly flat on the week, as this week's data (CA CPI, BoC Business Outlook Survey, US retail sales) and the stream of Iran-related headlines were not enough to shake the pair out of recent ranges, RBC said.RBC CAD Weekly Soundbites, noted a sharp leg lower below the 1.3500 area requires either 1) the US-CA rates spread to narrow more quickly than priced, cheapening the USD hedging costs, or 2) markets to attach a higher risk premium on US assets.RBC added that USD/CAD has been re-establishing its negative correlation to US equities after being 'risk-neutral' for much of the past year. This means USD/CAD is again acting like a natural hedge under risk-off - whether or not this continues will matter from a hedging incentive perspective.From a technical standpoint, RBC's George Davis said key trendline support at 1.3647 has held this week as the daily studies moved to oversold levels.A daily close below 1.3647 would end the corrective phase that has been in place since late January and favour a re-test of this year's lows at 1.3526 and 1.3482, RBC said.RBC added that resistance at 1.3799 and 1.3856 is expected to attract selling interest.

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International

USD/CAD Direction Driven By Iran Conflict, Rate Differentials, RBC Says

RBC Capital Markets on Friday said the USD/CAD pair is net down about 0.5% since its last update on March 27, rallying into Trump's self-imposed deadline and selling off as markets priced in a de-escalation in the Iran conflict.RBC, in its CAD Weekly Soundbites, said this morning's U.S. and Canada data are unlikely to change the Fed and Bank of Canada's "hold" stances for the foreseeable future. Hence, USD/CAD direction is likely to be a function of whether markets are pricing an escalation (USD-higher) or a de-escalation (USD-lower), with crude oil prices acting as a partial offset in the opposite direction.The more prolonged the Iran conflict is and its subsequent impact on energy prices and supply chains, the more likely it is that markets will focus on the monetary and fiscal responses in developed markets, RBC said.If both the Fed and the BoC are on hold, then the currently wide rate differentials will act as a floor to USD/CAD, but if the central banks' reaction functions start to show divergences, that can impact USD/CAD's direction and weaken CAD's mini-dollar status, RBC added.From a technical perspective, George Davis at RBC said a bearish trend reversal below 1.3860 has ended the near-term uptrend of the past month, with prices now probing the 200-dma at 1.3818. Below here, the focus would shift down to an old triple top from February-March at 1.3728. Initial resistance is now located at 1.3874, followed by stronger resistance at 1.3932 which has repelled four consecutive rallies since January, RBC said.

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International

RBC Says USD/CAD Direction Hinges On Iran Headlines As Yields Hold Steady

RBC Capital Markets said an on-consensus March employment report in an otherwise quiet week on the domestic calendar has helped Government of Canada yields finish the week close to where they ended last week, despite the continued uncertainty in the Middle East.With little on the data calendar next week and this morning's US/CA data unlikely to move the needle for both the Fed and Bank of Canada, USD/CAD's near-term direction is likely to be a function of whether markets are pricing an escalation (USD-higher) or a de-escalation (USD-lower), RBC said in its CAD Weekly Soundbites on Friday.Rates ViewOn the BoC, RBC said the central bank has been clear that the starting point matters for responding to the recent oil price spikes and knock-on impacts due to the Iran conflict. In particular, core inflation trending to target and excess slack in the Canadian economy afford the BoC some time to assess any potential second-order impacts.The recent rise in wage growth looks more due to compositional changes and should be looked through by the BoC, RBC said, adding it continues to see no change from the BoC in 2026 and hikes starting in 2027.On spreads, RBC said despite continued volatility, CA/US spreads continue to move sideways over the medium-term, with the 10-year marginally more negative on the week at -86bp.From a technical perspective, George Davis at RBC said the uptrend in CA 10-year yields came to an end on March 31 via a bullish trend reversal below 3.50%. This favours a move toward 3.36% initially, with additional resistance coming in at 3.25%. Initial support is located at 3.53%, with a return above 3.62% required to trigger a new bearish phase.Key Things To WatchIn Canada, RBC said Monday sees three federal byelections, including two in traditional Liberal strongholds in Toronto. Ahead of these, the latest floor-crosser from the Conservatives to the governing Liberals give the latter a 171-169 parliamentary advantage, meaning two wins will give them a clear, though slight, majority.RBC said there is a plethora of second-tier data next week as well, including February manufacturing sales on Wednesday, February wholesale trade on Wednesday, March existing home sales on Thursday and March housing starts on Friday.Globally, RBC said focus is on headlines related to the Iran conflict. Data wise, there will be March PPI in the US on Tuesday, March employment in Australia on Wednesday, Q1 GDP and March economic activity indicators in China on Wednesday, and February monthly GDP in the UK on Thursday.

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