Canadian Dollar Forecast - August 2026
Written by Ash AbbasiThe Canadian dollar enters August with USD/CAD trading near 1.40. The forecast points to a broadly range-bound August between 1.39 and 1.42, followed by gradual Canadian dollar appreciation. The blended forecast places USD/CAD at 1.41 in September 2026, 1.40 in December 2026 and 1.37 by June 2027.
CAD outlook cautiously constructive as August opens with oil volatility
The Canadian dollar began August amid mixed signals from energy markets and geopolitical developments. A pause in US military action against Iran initially pushed oil prices sharply lower, but conflicting reports about negotiations prompted a partial recovery. OPEC+’s planned September production increase adds further pressure, leaving CAD sensitive to continued oil volatility. Coordinated US–Japan intervention also drove CAD/JPY sharply lower. Meanwhile, the Federal Reserve’s interest rate advantage continues to support USD/CAD, while forecasts for slower Canadian growth, elevated inflation and steady rates point to limited near-term CAD upside.
Canadian Dollar Historical Performance
USD/CAD opened July near 1.4208, reached a high of approximately 1.4239 and fell as low as 1.3992 before ending the month near 1.4015. This represented an improvement of approximately 1.4% for the Canadian dollar over the month.
What’s Driving the Canadian Dollar
• Bank of Canada policy: The Bank held its policy rate at 2.25% in July, with the next decision scheduled for September 2.
• US Federal Reserve: The Fed held rates at 3.50%-3.75%, although three policymakers preferred a quarter-point increase.
• Inflation: Canada’s annual inflation rate eased to 2.8% in June from 3.2% in May.
• Growth: Canada’s GDP rose 0.3% in May, while the advance estimate indicated 0.2% growth in June.
• Labour market: Canada’s unemployment rate declined to 6.5% in June, making the August 7 employment report important.
• Trade uncertainty: Canada-US trade policy and the ongoing CUSMA/USMCA review remain potential sources of CAD volatility.
• Oil prices: Middle East developments and changes in global energy supply remain important for the commodity-linked Canadian dollar.
• US data: Employment, inflation, GDP and Federal Reserve commentary will influence the US dollar side of USD/CAD.
Historical Canadian Dollar Performance
The Canadian dollar is showing a mixed but stabilizing trend:
• USD/CAD: July High: 1.4239 | July Low: 1.3992
• EUR/CAD: July High: 1.6250 | July Low: 1.6026
• GBP/CAD: July High: 1.9021 | July Low: 1.8747
| Currency Pair | Aug 03, 2026 | Monthly Change | Yearly Change |
|---|---|---|---|
| USD / CAD | 1.40 | -1.12% | 1.93% |
| EUR / CAD | 1.62 | -0.52% | 1.32% |
| GBP / CAD | 1.89 | -0.47% | 3.00% |
| CAD / JPY | 111.89 | -1.06% | 4.92% |
| CAD / CHF | 0.58 | 2.01% | -1.60% |
| CAD / CNY | 4.81 | 0.64% | -7.86% |
| CAD / INR | 67.87 | 1.33% | 6.55% |
| AUD / CAD | 0.98 | 0.02% | 10.57% |
| NZD / CAD | 0.82 | 1.63% | 1.34% |
| CAD / MXN | 12.34 | 0.17% | -9.42% |
Canadian Dollar Forecast
The forecast points to USD/CAD remaining close to current levels through August and September, with the pair projected near 1.41 in September. It is then expected to ease gradually to 1.40 in December 2026, 1.39 in March 2027 and 1.37 by June 2027.
Lower oil prices following the pause in further US military action against Iran, additional OPEC+ production and the Canada–US interest rate gap could limit near-term CAD strength. However, renewed Middle East tensions may support oil, while reduced safe-haven demand could weaken the US dollar. Coordinated yen intervention may also keep CAD/JPY unusually volatile.
The main risks to the outlook are weaker Canadian data, falling oil prices and further trade restrictions. Stronger domestic growth, resilient energy prices, softer US inflation or a less restrictive Federal Reserve outlook would support a gradual Canadian dollar recovery.
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| Currency Pair | Sep 2026 | Dec 2026 | Mar 2027 | Jun 2027 |
|---|---|---|---|---|
| USD / CAD | 1.41 | 1.40 | 1.39 | 1.37 |
| EUR / CAD | 1.63 | 1.63 | 1.64 | 1.63 |
| GBP / CAD | 1.91 | 1.90 | 1.89 | 1.87 |
| CAD / JPY | 112.55 | 112.21 | 111.55 | 111.93 |
| CAD / CHF | 0.56 | 0.57 | 0.57 | 0.57 |
| CAD / CNY | 4.78 | 4.79 | 4.82 | 4.84 |
| CAD / INR | 67.19 | 67.74 | 68.07 | 69.00 |
| AUD / CAD | 1.01 | 1.01 | 1.01 | 1.00 |
| NZD / CAD | 0.82 | 0.83 | 0.83 | 0.83 |
Key Events to Watch - August 2026
These events can move the Canadian dollar quickly:
| Currency | Date | Event |
|---|---|---|
| CAD | Aug 4, 2026 | Trade Balance |
| USD | Aug 4, 2026 | Trade Balance |
| USD | Aug 5, 2026 | ISM Services PMI |
| CAD | Aug 7, 2026 | Employment Change |
| USD | Aug 7, 2026 | Nonfarm Payrolls |
| USD | Aug 12, 2026 | Inflation Rate |
| CAD | Aug 14, 2026 | Manufacturing and Wholesale Sales |
| CAD | Aug 17, 2026 | Inflation Rate |
| CAD | Aug 19, 2026 | Scheduled Implementation of New US Tariff Measures |
| USD | Aug 19, 2026 | Federal Reserve Meeting Minutes |
| USD | Aug 26, 2026 | GDP and Personal Consumption Expenditures |
| USD | Aug 27, 2026 | Jackson Hole Economic Policy Symposium (August 27–29) |
| CAD | Aug 28, 2026 | GDP |
Upcoming Central Bank Meetings
August’s central bank calendar is relatively light, with the Reserve Bank of Australia’s policy decision on August 11 as the main event. Markets will also assess inflation, employment and growth data for signals ahead of key Bank of Canada, Federal Reserve, European Central Bank, Bank of England and Bank of Japan decisions in September.
| Country | Date | Event |
|---|---|---|
| Canada | Sep 2, 2026 | Bank of Canada Interest Rate Decision |
| EU | Sep 10, 2026 | European Central Bank Interest Rate Decision |
| United States | Sep 16, 2026 | Federal Reserve Interest Rate Decision |
| United Kingdom | Sep 17, 2026 | Bank of England Interest Rate Decision |
| Japan | Sep 18, 2026 | Bank of Japan Interest Rate Decision |
People Also Ask About the Canadian Dollar
The base-case forecast is for USD/CAD to trade primarily between 1.39 and 1.42 during August. The pair is expected to finish the third quarter near 1.41 before moving gradually lower over subsequent quarters.
The Canadian dollar forecast today remains cautiously constructive, with USD/CAD still sensitive to oil prices, Fed-BoC interest rate gap, and Canadian economic data. You can follow the latest short-term market movements on the MTFX Daily FX Market Update.
The near-term outlook is neutral to slightly cautious. The medium-term consensus favours gradual Canadian dollar appreciation, with USD/CAD declining from approximately 1.41 in September 2026 to 1.37 by June 2027.
The USD/CAD forecast for this week depends on US dollar sentiment, Canadian data, oil prices, and central bank commentary. MTFX’s Weekly FX Forecast tracks the key market events that may affect CAD, USD, and other major currencies.
Whether you should convert CAD to USD now or wait depends on your transfer amount, deadline, and target exchange rate. If your transfer is not urgent, you can track the market using the MTFX Currency Converter or set a preferred rate with MTFX Rate Alerts.
The Canadian dollar exchange rate is affected by Bank of Canada decisions, US Federal Reserve policy, inflation, employment data, oil prices, global risk sentiment, and US–Canada trade conditions. To follow the CAD against major currencies, use the MTFX Currency Charts.
Interest rates impact the Canadian dollar by influencing investor demand for CAD-denominated assets. If the Bank of Canada becomes less hawkish while the Federal Reserve stays firm, CAD may weaken against USD. You can monitor related market updates on the MTFX FX Daily page.
US Federal Reserve rate decisions affect USD/CAD by changing expectations for US yields and US dollar demand. A higher-for-longer Fed stance can support USD/CAD, while softer US data or rate-cut expectations may limit US dollar strength. For US dollar-focused analysis, visit the MTFX US Dollar Forecast.
Oil prices affect CAD because Canada is a commodity-linked economy. Higher oil prices can support the Canadian dollar, while weaker oil prices can weigh on CAD and push USD/CAD higher.
The Canadian dollar may weaken against the US dollar when US yields remain high, Canadian growth slows, oil prices soften, or investors favour the US dollar during uncertain market conditions. To compare the latest CAD/USD movement, check MTFX Live Exchange Rates.
Businesses can manage Canadian dollar risk with forward contracts, market orders, rate alerts, and structured FX strategies. MTFX helps Canadian businesses reduce currency uncertainty through its FX Risk Management solutions.
You can get a better CAD exchange rate by comparing live rates, avoiding hidden FX margins, setting rate alerts, and using a specialist provider for international transfers. MTFX offers competitive exchange rates for personal transfers through its Send Money Online service and business payments through its International Business Payments solutions.
USD/CAD historical rates help you compare today’s exchange rate with year-to-date and month-to-date movements. YTD shows how the rate has changed since the start of the year, while MTD shows how it has moved during the current month. Checking these numbers can help you decide whether the current rate is favourable, whether to convert now, or whether to set a rate alert and wait for a better opportunity. Use the MTFX USD to CAD Historical Exchange Rates page to review past rates, highs, lows, and recent trends.
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How to read the CAD forecast?
The forecast shows you where the Canadian dollar is expected to head over the next few months, based on key market data and trends. Just pick the currency pair you care about (like CAD to the US dollar), and look across the quarters to see how the rate is projected to change.
If the future exchange rate is higher, it could mean the Canadian dollar is expected to weaken against the US dollar. If it’s lower, the loonie might be gaining strength. The Canadian dollar forecast can help you decide when to exchange, transfer, or hold off, giving you more control over your international payments.
Understanding volatility and risk in FX markets
Foreign exchange markets are highly sensitive to global events, including geopolitical tensions, economic data releases, and central bank decisions, and understanding trends can be crucial for navigating these changes. These factors can trigger sudden shifts in currency values, especially for currencies like the Canadian dollar and the US dollar. As a result, the Canadian dollar forecast can quickly change when new information impacts market sentiment.
For instance, an unexpected interest rate hike, a surprise inflation reading, or political instability can cause the CAD to strengthen or weaken rapidly. That’s why forecasts should be seen as directional insights rather than fixed outcomes; they’re based on current conditions but remain vulnerable to volatility.
