The country’s balance of payments, with a decade of trade deficits and direct investment outflows, is a third cause for concern (Exhibit 13). Using RBC Online Banking, you can exchange and move money—instantly and for free 1 —between your RBC Royal Bank Canadian and RBC Bank U.S. accounts, 24/7. While China remains an important U.S. adversary and while Biden may eventually pivot toward dealing with Russia, Iran and others – we think he has more important domestic priorities to tackle during his first 100 days in office. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. However, the currency could still experience a challenging end to 2020 before it embarks on a more sustained trend of appreciation, owing to short-term challenges facing the domestic and global economy. Source: Bloomberg, RBC GAM. USD/CAD remains in a consolidation phase as the … Canadian dollar. We remain moderately constructive on the loonie, thinking that it will strengthen to 1.27 per U.S. dollar from its current level of 1.31. As the year progresses, however, we expect the US dollar will start to regain ground with markets likely to look for the Federal Reserve to pare back stimulus ahead of other central banks, including the Bank of Canada.”. FXStreet has not verified the accuracy or basis-in-fact of any claim or statement made by any independent author: errors and Omissions may occur.Any opinions, news, research, analyses, prices or other information contained on this website, by FXStreet, its employees, partners or contributors, is provided as general market commentary and does not constitute investment advice. We remain cautious on the pound’s prospects for appreciation even if an agreement between the U.K. and EU is struck. The USD to CAD forecast at the end of the month 1.317, change for March 1.2%. Europe as a whole enjoys a healthier balance of payments, with trade surpluses that will be buoyed by stronger links to Chinese economic growth (Exhibit 7). The economic improvement in emerging markets has not been limited to Asia. Latest Report: Rising COVID cases make for a challenging start to 2021 The Canadian dollar forecasts have, however, been revised substantially higher from the previous month. A long range forecast for Canadian Dollar Exchange Rate and similar economic series is available by subscription. Economists at RBC Economics expect the Canadian dollar to hold onto gains until late 2021. The continued deterioration in fundamental factors such as U.S. fiscal and current-account deficits and relatively strong economic growth in the rest of the world are among the significant headwinds that should push the U.S. dollar meaningfully lower. Current Exchange Rates; February 01, 2021: Currency Exchange Rate; Japanese Yen to Dollar: 104.95: Euro to Dollar: 1.206: U.K. Coronavirus vaccination rollout is raising prospects of a swift economic recovery in the new year, although the pandemic is still far from controlled. January 8, 2021 Interest rates (%, end of quarter, ) Exchange rates (end of quarter) Forecast Forecast 20Q1 20Q2 20Q3 20Q4 21Q1 21Q2 21Q3 21Q4 22Q1 22Q2 22Q3 22Q4 2019 2020F 2021F 2022F Canada China accounts for an ever larger share of the global economy and its influence has grown further this year as a newly inked trade deal was struck in November with 14 of its Asian neighbours. FXStreet will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. The forecast has been updated: January 29, 2021 1:37 Data derived using 90d rolling correlation. The course of the pandemic will be key in determining the pace of euro gains. Finally. Here is a complete, in-depth US Dollar to Canadian Dollar (USD/CAD) outlook and forecast for 2021. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. Rate target in 14 days: 1.296. We have just been through an unimaginable year. The European Central Bank (ECB) has discussed the idea, though we doubt the governing council, which has historically been firm on its inflation target, would ever embrace above-2% inflation. US Dollar to Canadian Dollar forecast for March 2021. You should do your own thorough research before making any investment decisions. The use of this website constitutes acceptance of our user agreement. Source: With lower yields abroad, Japanese investors have been showing a preference for domestic assets (Exhibit 8) and lower hedging costs have led to increased hedges on foreign investments. This weekly update brings you the latest thinking from RBC Global Asset Management's Chief Economist Eric Lascelles. There are parallels between today’s environment and the years following the global financial crisis of 2008-2009 – a time when the yen rallied significantly. Note: As at Oct. 30, 2020. Get notifications straight to your inbox when new publications are released. Note: As at Oct. 13, 2020. These developments already seem to be having an effect: investor demand for a COVID-19-relief bond issued by the European Commission was a whopping 14 times larger than the amount of bonds being issued. Prices for these exports have seen a decent rise over the past few months. Canadian Dollar Forecast: On the Verge of a Bullish Breakout? One thing we can say with some confidence is that the U.S. Federal Reserve’s (Fed) approach to monetary policy is working against the U.S. dollar – a seemingly unusual assertion given that most developed nations have near-zero nominal interest rates. USD/CAD remains in a consolidation phase as the pair extends sideways grind around 1.2750. USD/CAD remains in a consolidation phase as the pair extends sideways grind around 1.2750. Monitor economic developments in some of the world’s largest countries including data on interest rates and currencies. Susan Kopas - Vice President, Portfolio Manager & Wealth Advisor of RBC Dominion Securities Inc. susan.kopas@rbc.com Phone: 905-332-2743 Fax: 905-332-2650 Our view on the Canadian dollar has become more positive this year as we assumed the peak in the U.S. dollar had passed once the safe-haven flows of March subsided. Country-specific factors are also playing a part, with investors noting that Canada is better positioned than many countries to provide the fiscal support needed to buttress the domestic economy in a post-pandemic world. The Canadian Dollar will strengthen in 2021 say analysts at Bank of America, driven by stronger investor inflows of capital and rising oil prices. The US dollar has been moving lower based upon the idea of stimulus being very strong, which could drive up the demand for crude oil. Read their latest thinking in this in-depth quarterly report and watch videos that highlight their views. Canadian Dollar Update, January 28, 2021 – Canadian Dollar Crushed USD/CAD Open: 1.2854-58, Overnight Range: 1.2798-1.2879, Previous Close: 1.2803 WTI … FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. USD to CAD forecast for April 2021. Equally important for emerging-market currencies is the strength of the Chinese renminbi given the country’s economic heft. Although the U.K. may grow quickly in 2021 in an absolute sense, its underperformance in 2020 was so severe that the country is still set to lag most of its peers in the timing of its return to economic normality, a dynamic worsened by Chancellor Sunak’s late-November decision to unwind pandemic-related fiscal spending. A stronger Chinese currency acts to improve the competitiveness of China’s trading partners because China accounts for an increasing percentage of their trade. You are currently viewing the Canadian website. CPI and Fed Chair Powell will be the main events to watch next week. Canadian Dollar Update, February 4, 2021 – Canadian Dollar resisting a retreat USD/CAD Open: 1.2806-10, Overnight Range: 1.2779-1.2823, Previous … ©Royal Bank of Canada. Note: All information on this page is subject to change. What still concerns us about the outlook for the Canadian dollar is the fact that many Canadian-dollar negatives are being brushed off by investors. While we cannot know exactly what 2021 will bring, we are increasingly confident that next year will include a weakening greenback. You will get notifications straight to your inbox when new publications are released. Had we known last December that 2020 would unfurl a global pandemic, 11th-hour Brexit talks and unprecedented efforts to throw out the U.S. election result, we would have predicted a very challenging year for global financial markets. Investors are eyeing stimulus news from Washington. Political crises such as negative publicity around Prime Minister Trudeau’s ties to a charity and his government’s efforts to bury what many are calling a scandal have hardly registered abroad. The shift in outlook is driven predominantly by improved economic-growth prospects, not only within emerging-market economies but also in many of the export destinations they serve. Moreover, Canada has pre-ordered more vaccinations per capita than any other developed nation (Exhibit 11), which should translate into a quicker economic recovery once those doses are administered. The Japanese monetary and fiscal regime under new Prime Minister Yoshihide Suga will be important for the year ahead, and, since these policies were big drivers of yen weakness during the Abe administration, we will be watching for any changes in policy. Second, Biden’s friendlier foreign-policy stance offers relief to a market exhausted by combative tweets and will provide a boost to the countries that had attracted the most attention from the Trump administration. The reopening of the economy will be slow and uneven and our forecast assumes that even if the economy returns to a more normal level of activity in 2021, it will probably take an additional year before the economy gets back to its pre-covid-19 trend. RBC predicts big stock gains in 2021 - but it comes with a catch Story continues below advertisement RBC Capital Markets is out with its forecast for … DOGE bulls have defended the lower trendline support of the pattern and aim for a significant rebound. Share. Open a U.S. Bank Account Sign in to Exchange Money Dollar to Canadian Dollar Forecast, USD to CAD foreign exchange rate prediction, buy and sell signals. One similarity is that deflation in Japan has returned, bolstering real yields and boosting the attractiveness of Japanese government bonds. However, we note that some Canadian-specific concerns may prevent the currency from appreciating as much as the euro, the yen or emerging-market currencies during a broad U.S. dollar decline. Key quotes “The Canadian dollar recovered its pandemic related losses against the US dollar as risk appetite improved. High levels of consumer leverage are another worry, with household indebtedness rising beyond the country’s annual economic output. Source: Bloomberg, RBC GAM. Get updated information & news daily on exchange rates! Moreover, the recent announcement of highly effective vaccines should lift consumer and business confidence. ECB President Christine Lagarde hardly mentioned the currency at an October 29 press conference, lowering the odds that she would try to talk down the euro as readily as her predecessors did (Exhibit 3). The solidarity shown among European nations in agreeing to a joint 750 billion-euro recovery fund will be rewarded with greater demand for European debt by long term investors, including the massive US$12 trillion collectively invested by global reserve managers. The US dollar-to-Canadian dollar, for example, is forecast above 1.3000 throughout next year with a move to 1.3500. China stands out as a big buyer of Japanese debt, and this reserve-diversification flow away from the U.S. dollar could also represent a lasting form of support for the yen. Even as unemployment soared and businesses reeled under springtime lockdowns, personal bankruptcies fell by 15% year over year and 19% for businesses. Source: MindOnTheMarkets, Bloomberg, RBC GAM. You should be aware of all the risks associated with foreign exchange trading and seek advice from an independent financial advisor if you have any doubts. Will other central banks follow suit by focusing on real yields? Investment outlook for your 2021 portfolio. Our view on the Canadian dollar has become more positive this year as we assumed the peak in the U.S. dollar had passed once the safe-haven flows of March subsided. As the economic fallout from COVID-19 is absorbed, ultralow rates should make equities the asset class of choice and fixed income more challenging. Forced to pivot, western provinces are now looking to participate in the global race toward net-zero emissions by 2050 and political support is building for hydrogen and natural gas as the saviours of western provinces. Oil extraction as a percentage of GDP has dropped to 2% from 6% over the past five years, and the energy sector’s share of business investment has shown a similar trend (Exhibit 12). Our 12-month forecast is for the pound to remain at 1.33, which would see it weaken relative to other currencies as the U.S. dollar declines. The Canadian dollar traded higher around 1.27 per USD to start 2021, extending a 2.1% gain in 2020, amid a general dollar weakness as bullish sentiment across global markets prompted investors to buy riskier assets. Moreover, the rising fair value of the euro in our purchasing- power-parity model is a function of lower inflation in Europe than in the U.S., a trend that will likely accelerate given the Fed’s inflation-tolerant approach. A forward-looking analysis of Canadian, U.S. and international financial market trends including interest rate and currency forecasts. Bloomberg, BOC, Macrobond, S&P Dow Jones, RBC GAM, Note: *Consists of advanced purchases and additional purchase XAU/USD gains following soft US jobs report, DOGE defends critical support and heads towards $0.060, US Dollar Index challenges daily lows near 91.20. Discover more insights from this quarter's Global Investment Outlook. To date, the ECB has been quiet about the Fed’s policies and the resulting euro strength. Levels for CAD/JPY, USD/CAD 2021-01-25 16:15:00 Christopher Vecchio, CFA , Senior Strategist Canadian Dollar: Don’t stop me now! The approval of COVID-19 vaccines is especially important, given the economy’s higher sensitivity to global growth. This group had been underperforming other risky investments since March, but is beginning to show more convincing signs of strength (Exhibit 5). This gap is a direct consequence of investors’ expectations that U.S. inflation will rise and has resulted in the U.S. now having one of the lowest real yields among G10 nations (Exhibit 2). options through 2021. Learn more about Cross-Border Banking. China’s willingness to relax its grip on this market is particularly noteworthy given the ever growing capital flows into China resulting from the inclusion of Chinese assets in major global bond and equity indexes. Even with the recent appreciation, the euro is still meaningfully undervalued (Exhibit 6). We have become more positive on emerging-market currencies and expect them to appreciate more than their developed-market peers in 2021. Source: Statistics Canada, RBC GAM. Click here to subscribe to the CAD Extended Forecast. The U.S. political transition should also act to push up emerging-market currencies. Fixed income. Economists at RBC Economics expect the Canadian dollar to hold onto gains until late 2021. The lack of pushback against the U.S. dollar’s decline and the reluctance to follow the Fed down the inflation-stoking path indicates to us that the greenback has much further to fall (Exhibit 4). Yes, the oil patch still forms an important part of the Canadian economy, but much less than it used to. Economists at RBC Economics expect the Canadian dollar to hold onto gains until late 2021. Trading foreign exchange on margin carries a high level of risk and may not be suitable for all investors. The currency broke above 1.20 per dollar recently from 1.07 in March, and we think it will continue to rally toward a seven-year high of 1.27 next year. While investors have begun to subscribe to our view and are buying the Canadian dollar, we don’t think that the currency’s recent strength necessarily reflects this newfound optimism. Investor attitudes toward the euro are improving. We are bullish for several reasons: Note: As at Oct, 31, 2020. ... Latest foreign exchange rate forecasts from RBC: 2020-2021… Shares in Gamestop (GME) are strong on Friday currently at $82.77. Moreover, Chinese currency strength (up 8% versus the dollar since June) allows emerging-market currencies to strengthen versus the dollar, diluting U.S. claims that they are actively holding down the value of their currencies. Finally, a return to normal might also involve faster population growth in the years to come, helping to shore up the economic growth rate as pent-up immigration materializes after borders are reopened. Note: As at Nov, 30, 2020. The President-elect’s proposals to increase regulations, raise corporate taxes and hike minimum wages also chip away at the sizable competitive advantage that the U.S. firms have enjoyed for several years under President Trump. Forecast Tables and Statistics. While some point to weaker crude-oil prices as a headwind for the Canadian economy, we wonder whether this might be exaggerated. In the beginning rate at 1.317 Canadian Dollars. The average for the month 1.313. Also, a variety of non-energy commodities, including metals, lumber and wheat, together make up nearly the same weight as oil in Canada’s exports. The Canadian dollar steadied around 1.27 per USD, close to levels not seen since April of 2018, as investors digest prospects of further economic stimulus in the US, lower oil prices and concerns over rising coronavirus infections and the economic impact of lockdowns around the world. U.S. twin deficits and the Fed’s intention to boost inflation, coupled with economic and political improvements as well as extraordinarily easy financial conditions abroad, should cement that U.S.-dollar downtrend. Perhaps most importantly, progress in addressing the risks of a Eurozone break-up have been very encouraging. In the beginning rate at 1.301 Canadian Dollars. Source: Bloomberg, Morgan Stanley, RBC GAM. Emerging-market currencies are likely to finally shine next year, as the euro, yen and loonie outperform the British pound. Note: As at Sep. 30, 2020. Canadian Dollar Price Forecast: USD/CAD, CAD/JPY, EUR/CAD 2021-02-01 17:30:00 James Stanley , Senior Strategist Canadian Dollar, USD/CAD, CAD/JPY, EUR/CAD Talking Points: Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. There is only one critical resistance level that Dogecoin needs to pass. Source: Haver Analytics, UBS, RBC GAM. ... but improved performance could further propel Canadian equities. Maybe. Low-cost and easy-to-distribute vaccines won’t be rolled out in many emerging-market countries until late 2021, but investors are already starting to factor in an easing of fiscal strains and faster economic growth. We expect that the yen will remain well-supported by capital inflows and forecast that it will strengthen to 99 per dollar in the coming year. Our 12-month forecast is for the pound to remain at 1.33, which would see it weaken relative to other currencies as the U.S. dollar declines. This puts more pressure on central bankers to ease monetary conditions, raising the odds that the Bank of England will follow through on a threat to impose negative interest rates next year. Further bolstering the argument for this pair going lower is the fact that the Canadian economic figures as of late have shown inflation rising, which is good for a … Dogecoin price is trading inside a parallel channel on the 1-hour chart. The year ahead also brings additional political drama as Scottish elections raise the specter of the country’s exit from the U.K., should another referendum be called. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. As these tensions ease, longer-term factors will prevail in the market narrative, and investors will likely have more conviction in selling the dollar. Presumably this time after four and a half years, the deadline is real. EUR/USD rises to 1.20 after disappointing jobs report. A report released in October by the Province of Alberta outlines a plan for large investments, incentives and partnerships to reposition the economy and capitalize on new opportunities in this area. Bank Canadian Dollar Currency Forecast: 2021 US dollar and Canadian dollar Forecast Q1: 2021 US dollar and Canadian dollar Forecast Q2: Scotia Bank Forecast* 1.30: 1.30: BMO Bank Forecast: 1.28: 1.27: CIBC Bank Forecast: 1.30: 1.32: TD Bank Forecast* 1.27: 1.25: National Bank Forecast: 1.29: 1.26 *Based on previous month. The major global central banks will likely keep the stimulus pedal to the metal in 2021, but amid concerns policy tools are already nearing speed limits, look for policymakers to fine-tune current programs in order to deliver the most efficient and focused aid to support the economic recovery. China, for example, has successfully navigated an exit from pandemic lockdowns and has experienced a quick rebound in economic activity. As at Nov. 30, 2020. Dec 01, 2020 | RBC Wealth Management . Stay in the know. In this monthly webcast, Eric Lascelles, Chief Economist, RBC Global Asset Management, shares his latest views on the global economy and offers insight into today’s economic issues. Find all things ETFs here: investment strategies, products, insights and more. Foreign purchases of Canadian stocks and bonds have temporarily pushed this structural problem to the back burner. We are also waiting to see how Japan-U.S. relations proceed after Biden’s inauguration in January. 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