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Desjardins Now Sees Less Upside for The Canadian Dollar Over The Next Year

BY MT Newswires | ECONOMIC | 10/02/25 11:58 AM EDT

11:58 AM EDT, 10/02/2025 (MT Newswires) -- With pension fund hedging largely in the rearview mirror, interest rate differentials are likely to become a more dominant driver of foreign exchange movements, said Desjardins.

Uncertainty remains around which central bank -- the Bank of Canada or the Federal Reserve -- will ultimately ease more relative to current market pricing, stated Desjardins.

The bank continues to see more scope for the BoC to sustain its dovish stance, while the Federal Reserve may be less inclined to ease if inflation accelerates.

Both should limit upside in the Canadian dollar (CAD or loonie), according to Desjardins.

The bank is maintaining its year-end USD/CAD forecast at 1.35 but has revised its 2026 target higher to 1.33.

MT Newswires does not provide investment advice. Unauthorized reproduction is strictly prohibited.

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In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.

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