Exchange Rate Calculator

The exchange rate between the Canadian dollar (CAD) and the U.S. dollar (USD) has experienced notable fluctuations over the past few months, influenced by a combination of economic indicators, monetary policies, and geopolitical events. As of July 1, 2025, the CAD/USD exchange rate stood at 0.7346, reflecting a strengthening of the Canadian dollar against its U.S. counterpart. (ycharts.com)

Recent Exchange Rate Movements

In June 2025, the Canadian dollar exhibited significant volatility. On June 26, it recorded its largest one-day gain in a month, appreciating by 0.7% to 1.3625 per U.S. dollar, reaching its highest level since June 17. This surge was primarily driven by a broad-based decline in the U.S. dollar, following reports that President Donald Trump had considered replacing Federal Reserve Chair Jerome Powell, which unsettled confidence in U.S. monetary policy stability. (reuters.com)

However, the following day, the Canadian dollar edged lower, trading 0.2% lower at 1.3662 per U.S. dollar. This decline was attributed to domestic data showing a contraction in Canada's economy, with gross domestic product (GDP) falling by 0.1% in April, led by a 0.6% decline in goods-producing industries. (reuters.com)

Economic Indicators and Their Impact

Gross Domestic Product (GDP): Canada's GDP contracted by 0.1% in April 2025, with a preliminary estimate indicating a further 0.1% decline in May. This downturn was largely due to a decrease in goods-producing industries, particularly the auto sector, which was affected by U.S. tariff uncertainties. (reuters.com)

Inflation: In May 2025, core inflation in Canada remained persistent, complicating prospects for near-term interest rate cuts by the Bank of Canada (BoC). Despite signs of easing inflation, the stickiness of core inflation suggests that the BoC may maintain its benchmark interest rate at 2.75% in the upcoming policy decision. (reuters.com)

Employment: In December 2024, Canada's employment rose by 91,000 positions (+0.4%), bringing the unemployment rate down to 6.7%. (benzinga.com) However, recent data indicates a slight increase in the unemployment rate to 7.0% in May 2025, reflecting potential challenges in the labor market. (tradingeconomics.com)

Monetary Policy Decisions

Bank of Canada (BoC): The BoC has been cautious in its monetary policy approach. After initiating rate cuts in June 2024, the central bank paused in April 2025, leaving the benchmark interest rate at 2.75%. The decision to hold rates steady was influenced by stronger economic data and rising inflation, suggesting that further easing might not be necessary in the immediate term. (maybefinance.com)

U.S. Federal Reserve: The U.S. Federal Reserve's monetary policy has also played a role in the CAD/USD exchange rate. In May 2025, the Fed decided to pause further easing, with Chair Jerome Powell citing caution and awaiting developments in the Trump administration’s economic agenda. This decision contributed to the strengthening of the U.S. dollar, impacting the exchange rate dynamics. (maybefinance.com)

Global Trade Developments

U.S. Tariff Policies: In late May 2025, a U.S. trade court blocked most of President Trump's proposed tariffs, prompting investor doubts about significant shifts in U.S. trade policy. This development led to a 0.2% appreciation of the Canadian dollar, as markets perceived a reduced risk of trade tensions that could negatively impact Canada's export-driven economy. (maybefinance.com)

Oil Prices: As a major exporter of oil, Canada's currency is sensitive to fluctuations in oil prices. In May 2025, oil prices experienced volatility due to forecasts of weaker demand from China and potential OPEC+ output increases. These factors contributed to fluctuations in the Canadian dollar, reflecting the currency's correlation with commodity prices. (maybefinance.com)

Forecasts and Future Outlook

Analysts have mixed forecasts for the CAD/USD exchange rate. A Reuters poll from January 2025 predicted that the Canadian dollar would edge 0.5% higher to 1.43 per U.S. dollar in three months and be up 3% at 1.3950 in a year. However, these projections are subject to change based on evolving economic conditions and policy decisions. (reuters.com)

In summary, the CAD/USD exchange rate has been influenced by a complex interplay of domestic economic indicators, monetary policies, and global trade developments. While the Canadian dollar has shown resilience in certain periods, ongoing economic challenges and policy uncertainties continue to impact its performance against the U.S. dollar.