On January 30, analysts from ING, including Francisco Pesole, highlighted potential challenges for the Canadian dollar. According to Jin10, the currency may weaken if the U.S. dollar continues its upward trend, negotiations for the renewal of the USMCA agreement stall, and Canada's unemployment rate rises further. The deteriorating relationship between the U.S. and Canada, along with employment market issues, could increase expectations for further interest rate cuts by the Bank of Canada.
The Bank of Canada is closely monitoring the quarterly business outlook survey. Despite improvements in other economic confidence indicators, this survey consistently shows that trade uncertainty was the main reason for the decline in hiring intentions among businesses in the fourth quarter. ING suggests that the USD/CAD exchange rate could rise to the range of 1.36-1.37.