CAD to USD Forecast: 1.35 by Q4 2023

Will the CAD strengthen against the USD in 2023?

The Canadian dollar (CAD) has been on a tear against the US dollar (USD) in recent months, rising from a low of 1.2450 in May 2022 to a high of 1.3678 in September 2022. This rally has been driven by a number of factors, including rising oil prices, a strong Canadian economy, and a dovish Federal Reserve.

However, there are also some headwinds facing the CAD in the coming months. The global economy is slowing down, which could weigh on demand for Canadian exports. Additionally, the Bank of Canada is expected to raise interest rates more slowly than the Fed, which could lead to a narrowing of the interest rate differential between the two countries.

Overall, the outlook for the CAD is mixed. There are both upside and downside risks to the currency in the coming months. However, we believe that the CAD is likely to strengthen against the USD in the long run, as the Canadian economy is expected to continue to outperform the US economy.

CAD to USD Forecast for Q4 2023

We forecast that the CAD will strengthen against the USD in Q4 2023, reaching a value of 1.35. This forecast is based on the following factors:

• Rising oil prices: Oil is Canada's largest export, and rising oil prices will boost the Canadian economy.
• Strong Canadian economy: The Canadian economy is expected to continue to grow at a healthy pace in 2023.
• Dovish Federal Reserve: The Fed is expected to raise interest rates more slowly than the Bank of Canada, which will lead to a narrowing of the interest rate differential between the two countries.

Key Risks to the Forecast

There are some key risks to our forecast, including:

• A global economic slowdown: A global economic slowdown could weigh on demand for Canadian exports.
• A hawkish Bank of Canada: If the Bank of Canada raises interest rates more quickly than expected, it could lead to a widening of the interest rate differential between Canada and the US.
• A stronger US dollar: The US dollar could strengthen against other currencies, including the CAD, if the US economy outperforms expectations.

Conclusion

The CAD has been on a strong run against the USD in recent months, and we believe that this trend is likely to continue in the coming months. We forecast that the CAD will reach a value of 1.35 against the USD in Q4 2023. However, there are some key risks to our forecast, including a global economic slowdown, a hawkish Bank of Canada, and a stronger US dollar.

Tables

The following tables provide additional information on the CAD to USD forecast: