USD Outlook
The US dollar has surged amidst escalated tensions in the Middle East, driving robust demand for safe-haven assets such as the dollar, gold, and US Treasuries, while stocks and other currencies have suffered. The heightened risk of a regional war has become significant, raising the question of whether Israel and/or Iran aim to expand the conflict, which poses an additional wildcard factor . The US dollar should benefit as investors seek safety.
Meanwhile, concerning the economy, the sustained strong growth in US jobs and the economic expansion will force the Federal Reserve to keep its attention on inflation. Despite the intricacies of the situation, the central bank has retained the possibility of interest rate cuts in the near future. The anticipated pace of these rate cuts is expected to be gradual, further contributing to the US dollar maintaining historically high levels.
The CAD was roughed up by the strong USD in no uncertain terms over the last few weeks. A net loss of 1.25% is its worst performance against the USD in close to a year. Wider spreads and geopolitical tensions are driving USD gains. Canada's economic woes relative to its southern neighbor and a potential divergence in monetary policy could further weaken the Canadian dollar towards 1.40.
US Dollar / Canadian Dollar Forecasts - April 2024
| Bank | Trend | Apr 15, 2024 (actual) | Q2 2024 (forecast) | Q3 2024 (forecast) | Q4 2024 (forecast) | Q1 2025 (forecast) |
| BMO | ⇗ | 1.38 | 1.35 | 1.34 | 1.32 | 1.31 |
| CIBC | ⇗ | 1.38 | 1.37 | 1.35 | 1.35 | 1.33 |
| Desjardins | ⇒ | 1.38 | 1.35 | 1.33 | 1.34 | 1.35 |
| NBC | ⇘ | 1.38 | 1.38 | 1.40 | 1.42 | 1.40 |
| RBC | ⇗ | 1.38 | 1.37 | 1.35 | 1.33 | 1.34 |
| Average | ⇒ | 1.38 | 1.36 | 1.35 | 1.35 | 1.35 |
EUR Outlook
The Euro plummeted dramatically , primarily due to the contrasting stances of the Federal Reserve and the European Central Bank. The ECB's decision to maintain rates at 4%, despite internal disagreement with some members advocating for a rate cut, coupled with a dovish tone in its monetary statement, heightened expectations for imminent monetary policy easing. Investors eye June as a potential milestone, positioning the ECB in an unprecedented stance of adjusting its monetary policy ahead of the Federal Reserve. If the ECB were to cut rates before the US Fed, the Euro could drop further against all major currencies, including the Canadian dollar.
Euro / Canadian Dollar Forecasts - April 2024
| Bank | Trend | Apr 15, 2024 (Spot) | Q2 2024 (forecast) | Q3 2024 (forecast) | Q4 2024 (forecast) | Q1 2025 (forecast) |
| BMO | ⇗ | 1.46 | 1.47 | 1.46 | 1.45 | 1.45 |
| CIBC | ⇘ | 1.46 | 1.47 | 1.47 | 1.50 | 1.49 |
| Desjardins | ⇘ | 1.46 | 1.46 | 1.47 | 1.49 | 1.51 |
| NBC | ⇒ | 1.46 | 1.46 | 1.46 | 1.46 | 1.46 |
| RBC | ⇒ | 1.46 | 1.45 | 1.43 | 1.44 | 1.46 |
| Average | ⇒ | 1.46 | 1.46 | 1.46 | 1.47 | 1.47 |
GBP Outlook
Sellers of GBP made a strong comeback amid renewed demand for the US Dollar, driven by expectations of a policy pivot by the US Federal Reserve (Fed) and escalated geopolitical tensions in the Middle East. These tensions have continued to weigh on the higher-yielding Pound Sterling while favoring safer assets.
British Pound / Canadian Dollar Forecasts - April 2024
| Bank | Trend | Apr 15, 2024 (Spot) | Q2 2024 (forecast) | Q3 2024 (forecast) | Q4 2024 (forecast) | Q1 2025 (forecast) |
| BMO | ⇗ | 1.72 | 1.70 | 1.70 | 1.68 | 1.68 |
| CIBC | ⇘ | 1.72 | 1.71 | 1.71 | 1.77 | 1.76 |
| Desjardins | ⇘ | 1.72 | 1.72 | 1.73 | 1.74 | 1.77 |
| NBC | ⇒ | 1.72 | 1.71 | 1.71 | 1.70 | 1.71 |
| RBC | ⇗ | 1.72 | 1.71 | 1.66 | 1.65 | 1.66 |
| Average | ⇒ | 1.72 | 1.71 | 1.70 | 1.71 | 1.72 |
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