USD/CAD: Oil support but gains capped – Commerzbank
|Commerzbank’s Michael Pfister argues the Canadian Dollar has started to benefit from higher Oil prices, but structural headwinds and close linkage to the US Dollar limit outperformance. A sustained Oil price above $100 could improve Canada’s real rate differential versus Europe, yet Commerzbank remains cautious on further CAD strength and keeps its USD/CAD forecast at 1.37 for H1 2026.
Energy boost versus growth and trade risks
"If oil prices settle above $100 per barrel amid a continuing war in the Middle East, the CAD is likely to benefit further."
"Conversely, this means that the real interest rate differential with many European currencies should improve significantly in such a scenario, should they hike interest rates only very hesitantly given their relatively weak real economies."
"In EUR/CAD, we might test lower levels in the event of a continued energy price shock, but this would likely be due mainly to a weaker euro and better terms of trade for the CAD."
"For USD/CAD, we continue to assume that sustainably lower levels are unlikely to be reached until the second half of the year."
"Accordingly, we remain comfortable with our USD/CAD forecast of 1.37 for the first half of the year."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.