The Canadian dollar is poised to strengthen if progress is achieved in the review of the Canada-United States-Mexico Agreement (CUSMA), according to a Reuters poll of currency analysts. The survey, released on Thursday, suggests that optimism surrounding the trade pact could bolster the loonie in the near term.
Poll Highlights
The poll, conducted from May 29 to June 3, surveyed over 40 foreign exchange strategists. A majority of respondents indicated that the Canadian dollar would appreciate if the CUSMA review yields positive outcomes. The median forecast for the Canadian dollar in three months was 1.36 per U.S. dollar, stronger than the current level of around 1.37.
Analysts noted that the currency has been under pressure due to uncertainty over trade policy and domestic economic weakness. However, progress on CUSMA could provide a significant boost. "A successful review would remove a key source of uncertainty and support the Canadian dollar," said one strategist.
Market Context
The Canadian dollar has weakened over the past year, partly due to the Bank of Canada's interest rate cuts and a slowdown in the housing market. The currency touched a five-year low of 1.39 per U.S. dollar in April. Since then, it has recovered somewhat but remains under pressure.
Trade tensions with the United States have been a major headwind. The CUSMA review, which began in 2025, has been closely watched by markets. Any signs of progress could lead to a rally in the loonie.
Expert Opinions
According to the poll, the Canadian dollar is expected to trade at 1.35 per U.S. dollar in six months and 1.33 in a year, assuming a favorable resolution of the CUSMA review. However, risks remain, including the possibility of tariffs or other trade barriers.
"If the review fails, we could see the Canadian dollar weaken further," warned another analyst. "But if there is progress, the currency could strengthen significantly."
The poll also highlighted the impact of commodity prices, particularly oil, on the Canadian dollar. With oil prices relatively stable, the focus remains on trade developments.
