5-Bank Canadian Dollar Forecast — April 2026

Canadian Dollar Forecast — April 2026

Canada's dollar has been caught between two powerful macro forces in early 2026: the oil price surge sparked by US‑Iran hostilities, and the ongoing drag from US trade policy uncertainty. WTI crude oil settled above $102/bbl in late March — its best monthly performance since May 2020 and the highest price since 2022 — providing meaningful support to the loonie as a major energy-exporting currency. NBC and Scotiabank strategists have specifically highlighted Canada's large net energy surplus as a structural CAD positive through the remainder of 2026.

Offsetting this tailwind, the interest-rate differential between the Bank of Canada (2.25%) and the US Federal Reserve (3.50–3.75%) remains wide. The BoC held in March amid a soft labour market — unemployment rose to 6.7% in February as Q4 2025 employment gains were reversed — and below-target CPI of 1.8%. Most bank economists see the BoC on hold through at least mid-2026, while the Fed is expected to make at most one cut this year given sticky US inflation (core PCE at 2.7%) and oil-shock inflation risk. This divergence keeps USD/CAD somewhat elevated relative to longer-run fair-value estimates.

Five major Canadian bank research desks now collectively see USD/CAD ending 2026 in the 1.32–1.39 range, with a consensus average near 1.34 by year-end. The April 29 Bank of Canada rate decision — accompanied by the full Monetary Policy Report — is the key near-term risk event that could reprice CAD rate expectations significantly.

Key Themes to Watch This Month

1. Oil Above $100 — A Double-Edged Sword

WTI crude's surge above $100/bbl is a nominal positive for the loonie, but analysts caution that energy-price inflation also risks pushing global growth lower. Prolonged Strait of Hormuz disruption could simultaneously lift Canadian oil revenue while weighing on global demand — creating a complex, two-sided effect on the CAD.

2. US Tariffs and Trade Policy Uncertainty

The 25% US tariff on most Canadian goods and 10% on energy remains in force, cutting Canada's 2026 GDP growth forecast to just 1.1%. A threat of 100% tariffs should Canada finalize a trade deal with China adds further tail risk. Business investment has slowed materially, and consumer confidence remains fragile.

3. BoC April 29 Decision — Hold or Pivot?

With CPI at 1.8% — below the 2% target — and unemployment rising to 6.7%, the BoC has room to ease. But rising oil prices represent a near-term inflation risk that complicates the calculus. Markets are pricing a hold, but any dovish language in the April 29 statement could push USD/CAD higher toward 1.42–1.44.

4. Broad USD Softness

The US dollar has lost roughly 9% on a broad trade-weighted basis since its peak, as markets reprice Fed cut expectations and geopolitical risk flows distribute unevenly. This structural USD softness is a key reason the consensus sees USD/CAD drifting toward the mid-1.30s by year-end despite BoC‑Fed policy divergence.

USD/CAD Forecast — April 2026

USD/CAD opened April 2026 near 1.390, well below January's peak of approximately 1.44 as oil-driven CAD strength and a broadly weaker USD have pushed the pair lower. The Bank of Canada's March hold at 2.25% — flagging rising energy prices as an upside inflation risk — kept near-term policy expectations anchored. The Federal Reserve's hold at 3.50–3.75%, with its 2026 PCE inflation forecast revised up to 2.7%, has reduced the probability of any Fed easing in Q2, maintaining the differential that caps CAD gains.

Bank forecasts show meaningful dispersion: TD and CIBC are more cautious, seeing the pair in the 1.36–1.42 range through H1 2026, while Scotiabank and NBC are more CAD-bullish, targeting 1.33 and 1.32 by year-end respectively, citing energy fundamentals and expected USD depreciation. The consensus across all five banks points to USD/CAD near 1.37 by mid-year and 1.34 by Q4 2026. Key April risk events: Canada Feb GDP (Apr 1), Canada March jobs (Apr 11), US March CPI (Apr 15), and the pivotal BoC decision on April 29.

Client Takeaway

For Canadians with upcoming USD payment obligations — US property, tuition, or business invoices — the current environment favors a layered approach. USD/CAD has dipped from January highs near 1.44, and oil-driven CAD strength may provide further near-term improvement. Consider converting a portion now near 1.39 while retaining flexibility ahead of April 29. A forward contract can lock in today's rate for future payments if budget certainty is a priority. Speak with a currency advisor about structuring your exposure around this month's key events.