Economic Outlook and Summary
The Canadian Dollar has gotten stronger thanks to our strong economic recovery from the pandemic. The US Dollar has also made some gains for some of the same reasons; a decrease in new covid cases and a recovering economy. Oil prices continue to rise as winter arrives and global production can’t seem to meet demand.
The USD and Federal Reserve
The greenback remains strong as it continues from its upward trend in Q4 when compared to Q3. The US dollar is currently being supported by the decline of new covid cases in the United States and as well as a surge of new Covid cases in Europe and in China. That’s not the only thing keeping the greenback strong; there are expectations that the Feds will start announcing a tighter economic policy as the US economy continues to recover.
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The Canadian Dollar and Bank of Canada
The loonie is also getting stronger, but not as strongly as the greenback. There is strong support for the loonie as solid economic reports have been produced. In October, Canada’s employment levels have returned to its pre-pandemic levels. Inflation in Canada has reached 4.4% annually, the highest that it’s been in 18 years. Lastly on October 27th, the Bank of Canada revised its monetary policy to be more aggressive in reaching its normal rate. The Canadian economy seems to be hitting all the right signals for a stronger Canadian dollar.
Oil Prices
Brent crude oil has averaged to $84/b in October, up from an average of $75/b in September. WTI (Western Texas Intermediate) has averaged $81/b in October and has also increased from September; up from an average of $71/b. Restraints in global production and higher demand from the upcoming winter have driven up these prices. The price of natural gas seems to also have risen together with oil. Canadians are in for a more expensive winter.
Forecast Table
| Bank | 2022-USD/CAD Q1 | 2022-USD/CAD Q2 |
| Scotiabank | 1.26* | 1.24* |
| Bank of Montreal | 1.22* | 1.21* |
| CIBC | 1.28 | 1.29 |
| TD Bank | 1.25 | 1.26 |
| National Bank | 1.22 | 1.20 |
*Forecast based on previous month. Forecast Table is for mid-market rates, and subject to change anytime.
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