Exchange Rate Calculator

The USD/CAD exchange rate has experienced notable fluctuations over the past few months, influenced by a combination of economic indicators, monetary policies, and geopolitical events. As of June 27, 2025, the exchange rate stood at 1.365 CAD per USD, reflecting a complex interplay of factors affecting both the U.S. and Canadian economies.

Recent Exchange Rate Movements

In the first half of 2025, the USD/CAD pair exhibited significant volatility. In April, the exchange rate peaked at approximately 1.395 CAD per USD, driven by a stronger U.S. dollar and concerns over Canada's economic performance. By mid-June, the rate had declined to around 1.357 CAD per USD, indicating a strengthening Canadian dollar. This trend reversed slightly by late June, with the exchange rate rising to 1.365 CAD per USD. (ycharts.com)

Economic Indicators and Their Impact

Canada's Economic Performance

Canada's economy showed signs of contraction in the second quarter of 2025. Gross Domestic Product (GDP) fell by 0.1% in April, primarily due to a 0.6% decline in goods-producing industries, notably the auto sector, which was affected by U.S. tariff uncertainties. A preliminary estimate indicated a further 0.1% contraction in May. These downturns have raised concerns about the country's economic resilience and have influenced the Canadian dollar's valuation. (reuters.com)

U.S. Economic Performance

In contrast, the U.S. economy exhibited mixed signals. A downward revision of U.S. GDP showed a contraction at an annualized rate of 0.5% in the first quarter of 2025. Additionally, reports emerged that President Donald Trump had considered replacing Federal Reserve Chair Jerome Powell by September or October, shaking confidence in U.S. monetary policy stability. These developments contributed to a broad-based decline in the U.S. dollar, impacting the USD/CAD exchange rate. (reuters.com)

Monetary Policies and Interest Rates

Bank of Canada (BoC)

The BoC has maintained its benchmark interest rate at 2.75%, citing persistent core inflation as a significant hurdle for near-term rate cuts. Market expectations suggest a 62% probability that the BoC will hold its key interest rate at the upcoming July 30 policy decision, with potential for a cut in September. (reuters.com)

Federal Reserve (Fed)

The Federal Reserve's monetary policy has been under scrutiny, especially with speculation about potential leadership changes. The Fed's benchmark interest rate remains at 4.5%, creating a 1.75% differential with the BoC's rate. This gap has implications for capital flows and the relative strength of the U.S. dollar against the Canadian dollar. (benzinga.com)

Commodity Prices and Trade Relations

Oil Prices

As a major oil exporter, Canada's currency is closely tied to oil prices. In late June, oil prices were trading at $65.12 per barrel, down 0.2%, amid reduced geopolitical risk. This decline has removed a key support pillar for the Canadian dollar, contributing to its recent depreciation. (reuters.com)

Trade Relations

Trade tensions have also played a role in currency fluctuations. President Trump's announcement of terminating trade discussions with Canada over its new digital services tax and the threat of imminent retaliatory tariffs have rattled exporters and undermined confidence in near-term growth. These developments have added pressure on the Canadian dollar. (tradingeconomics.com)

Forecasts and Market Sentiment

Analysts have mixed forecasts for the USD/CAD exchange rate. Some predict a slight decline in the Canadian dollar in the coming months due to trade uncertainties and interest rate differentials, with expectations of the loonie weakening to 1.44 per U.S. dollar in three months. However, a potential recovery is anticipated, with the currency projected to strengthen to 1.4167 per U.S. dollar in a year. (reuters.com)

Technical indicators suggest that the USD/CAD pair is experiencing consolidation, with the exchange rate hovering near its 8-day and 21-day Exponential Moving Averages (EMAs). The Moving Average Convergence Divergence (MACD) line is above its signal line, indicating positive momentum and confirming an uptrend. (exchangerates.org.uk)

Conclusion

The USD/CAD exchange rate is influenced by a complex interplay of economic indicators, monetary policies, commodity prices, and trade relations. While recent data points to a weakening Canadian economy and potential trade challenges, the outlook remains uncertain. Market participants should closely monitor upcoming economic data releases, central bank decisions, and geopolitical developments to navigate the evolving landscape of the USD/CAD currency pair.