UBS eyes 1.42 for USD/CAD by 2026 By Investing.com

Investing.com -- On Liberation Day,ex foreign exchange official website the Canadian dollar (CAD) outperformed its high-beta counterparts worldwide after Canada was excluded from a list of nations targeted by new tariffs. UBS analysts have addressed the implications of this development, debating whether Canada has permanently avoided tariffs or has merely postponed them.

UBS suggests that the truth is a middle ground. Canada is not a priority on President Trump's list for tariffs, but it is unlikely to completely evade future trade penalties. Significant tariffs have already impacted Canadian industries, including the automotive sector, and there is a potential for more sector-specific tariffs on the horizon.

Despite the current situation, UBS has decided to maintain its unchanged forecast for the USD/CAD exchange rate at 1.46 for June. The firm anticipates short-term upside risks for the USD/CAD, reflecting the ongoing uncertainty.

Nevertheless, UBS analysts project a longer-term downward trend for the currency pair, setting a target of 1.42 by March 2026. This expectation is based on a forecasted broader weakness in the US dollar over time.

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