The Canadian dollar posts biggest weekly loss since February as poll still sees it at 1.35 in 12 months
Canada’s dollar just had its worst week in nearly a year, even as many strategists still see it firming over the next 12 months – a mix that matters for plans with Canadian liabilities and global assets.
According to Reuters, the loonie fell 1.3 percent against the US dollar over the week, its biggest weekly decline since February last year, and traded around 1.3905 per US dollar, or 71.92 US cents.
The US dollar gained broadly after US jobs data failed to show a “more pronounced slowdown,” which reduced the odds of a near-term Federal Reserve cut and lent “broader-based support to the USD.”
Geopolitics around oil are adding pressure.
“The geopolitical events in Venezuela have been weighing on the Canadian dollar most of this week, as US control of their energy sector will present longer-term structural risk for Canada’s heavy oil export markets,” said George Davis, chief technical strategist at RBC Capital Markets.
As per Reuters, a boost in Venezuelan exports to the United States could hurt Canadian companies that sell similar heavy oil if Venezuelan crude diverts to that market.
On the domestic side, labour data are not giving a clear directional signal for the currency.
Canada added 8,200 jobs in December after three strong months, while the unemployment rate rose to 6.8 percent from 6.5 percent as more people searched for work, versus expectations for a 5,000 job loss and a 6.6 percent jobless rate.
Davis described the report as “more of a neutral factor for the currency” because stronger-than-expected job gains were offset by the higher unemployment rate, Reuters said.
Policy and the medium‑term FX view are more constructive.
The Bank of Canada has cut its benchmark rate to a three-year low of 2.25 percent and signalled a possible end to its easing cycle, with investors seeing roughly a 50 percent chance of rate hikes by the end of 2026.
In a January 5–7 poll of 38 foreign exchange analysts, Reuters said the median forecast called for the loonie to edge to 1.38 per US dollar (72.46 US cents) in three months and to 1.35 in 12 months.
“We expect USD-CAD to weaken as the Fed eases interest rates and risk-on sentiment returns,” said Jayati Bharadwaj, global FX strategist at TD Securities.
She added that broad USD weakness and the resolution of USMCA uncertainty by the middle of the year should encourage investors to become more optimistic on the Canadian dollar.
Trade architecture and energy flows frame some of that risk and opportunity.
The United States-Mexico-Canada Agreement, which Reuters noted has shielded much of Canada’s exports from US tariffs, faces a joint review in 2026.
Some investors worry a rise in Venezuelan exports to the United States could hurt Canadian heavy oil producers and weaken Canada’s hand in trade talks.
Reuters also reported that Prime Minister Mark Carney has argued Canadian crude is low risk and will stay competitive even if Venezuelan output rises, and has pledged billions for infrastructure and productivity measures as a possible boost to Canada’s economy.
