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Softer Canada CPI boosts USD/CAD as rate divergence keeps pressure on CAD
TD Securities expects USD/CAD to stay near 1.39 through the second half of 2026, with the pair’s downside capped by broader US Dollar strength.
TD Securities strategists said softer Canadian CPI data is lifting USD/CAD, pointing to ongoing rate divergence as the key driver for the exchange rate.
They argued that broad US Dollar strength should limit USD/CAD downside to below 1.40, and they forecast the pair will remain close to 1.39 through H2 2026.
The note also said higher Oil prices could support the Canadian Dollar on some cross rates, but not enough to offset the pressure versus the US Dollar.
FXStreet summarized the view alongside broader market context, including that USD strength has been a factor in currency moves, while attention later shifts to upcoming central bank and economic events.