Weekly Currency Update: Canadian Dollar Forecast This Week

The US dollar ended the week on the back foot as hopes for a US-Iran ceasefire extension reduced safe-haven demand and helped risk appetite recover. The greenback also struggled as markets looked past sticky inflation and focused on weaker momentum in the broader US policy outlook. Next week, USD direction will depend on Fed commentary, upcoming US data and whether the Hormuz ceasefire talks hold.

The Canadian dollar had a choppy week, briefly benefiting from improved risk sentiment before weaker GDP data clipped confidence in the domestic outlook. Canada’s technical recession lowered expectations for further Bank of Canada tightening, while falling oil prices also limited support for the loonie. Next week, CAD will be driven by Bank of Canada pricing, oil markets, Canadian data and trade uncertainty around the USMCA review.

The euro strengthened as broad US dollar weakness and improved geopolitical sentiment supported major alternatives to the greenback. However, eurozone energy risks did not disappear, with markets still cautious about the inflation and growth impact if tensions return around the Strait of Hormuz. Next week, EUR will depend on ECB signals, eurozone inflation data and the direction of energy prices.

Sterling advanced as the US dollar weakened and investors moved back into risk-sensitive European currencies. The pound also benefited from calmer energy-market sentiment, although the UK remains vulnerable to imported inflation if oil prices rise again. Next week, GBP will be guided by Bank of England commentary, UK activity data, fiscal headlines and geopolitical developments.

The Japanese yen remained close to intervention-sensitive levels, even as the softer US dollar helped limit further losses. Japan’s authorities stayed in focus after earlier currency support, with markets watching whether renewed yen weakness could trigger another response. Next week, JPY will depend on US yields, Bank of Japan expectations, intervention rhetoric and oil-market developments.

The Swiss franc softened modestly as improved risk sentiment reduced demand for traditional safe havens. Still, the currency remained supported by residual geopolitical caution and Europe’s sensitivity to energy disruption. Next week, CHF will track Middle East headlines, European rate expectations and any Swiss National Bank comments on currency strength.

The Chinese yuan traded with a steadier tone as the weaker US dollar helped relieve pressure on Asian currencies. Policy management kept moves contained, while investors continued to weigh China’s domestic momentum against external demand and energy risks. Next week, CNY will be shaped by Chinese activity data, trade signals, policy guidance and the broader US dollar trend.

The Indian rupee rebounded sharply as oil prices fell and suspected central bank support helped stabilise sentiment. Lower crude prices offered relief for India’s import bill, while markets turned attention toward the Reserve Bank of India’s upcoming policy decision. Next week, INR will be driven by RBI guidance, crude prices, inflation expectations and foreign portfolio flows.

The Australian dollar gained as the weaker US dollar and improved risk tone encouraged demand for higher-beta currencies. Falling oil prices and hopes for a ceasefire helped ease global inflation concerns, supporting cyclical FX. Next week, AUD will depend on China-linked data, commodity prices, RBA expectations and global risk appetite.

The New Zealand dollar strengthened as investors moved away from defensive dollar positions and back toward risk-sensitive currencies. The kiwi also drew support from expectations that the Reserve Bank of New Zealand may remain alert to inflation risks. Next week, NZD will be guided by domestic confidence data, China-related signals and broader market sentiment.

The Mexican peso held firm as a softer US dollar and improved risk appetite supported emerging-market currencies. Carry demand remained a key source of support, although falling oil prices and lingering geopolitical uncertainty limited a stronger rally. Next week, MXN will track US data, Banxico expectations, oil prices and broader emerging-market flows.