Economist David Rosenberg says he is bullish on the Canadian dollar for the first time in years, setting a 2026 target of US$0.77 and suggesting the loonie may climb even higher as economic conditions shift in Canada’s favour.
Rosenberg’s view comes as interest-rate expectations in Canada and the United States begin to converge. Markets see the Bank of Canada largely finished with cuts, while the U.S. Federal Reserve is still expected to ease policy several more times. A narrowing rate gap from –175 basis points to roughly –50 basis points would historically support a stronger Canadian dollar.
Revised GDP data also show the Canadian economy running tighter than previously thought. Unemployment has fallen to 6.5%, wage growth is holding around 4%, and the employment-to-population ratio is above its long-term average — all signs that the output gap is closing and the labour market is near full capacity.
Valuation models point in the same direction. The Big Mac Index suggests fair value near US$0.80, and Rosenberg’s own Strategizer model recently strengthened its signal. OECD purchasing-power estimates also show the loonie undervalued by about 10% to 15%.
Canada’s long-standing productivity slump shows early signs of improving, with productivity posting roughly 4% annualized gains in recent quarters. That has flattened unit labour costs in U.S. dollar terms, while U.S. labour costs continue to rise — reducing the need for a weak currency to maintain competitiveness.
Foreign investment is also returning. After years of outflows, Canada has recorded several quarters of net FDI inflows, with global investors increasing exposure to critical minerals, clean technology, and financials. The shift has been described by major banks as a possible structural turning point.
Stronger commodity prices are adding support. Oil remains above US$80 a barrel, metals have rallied on improving global manufacturing demand, and the critical-minerals sector is attracting major U.S. and European investment. Canada’s current-account deficit has narrowed as exports improve.
Housing markets, while still adjusting, have stabilized enough to reduce downside economic risks, and Canada’s fiscal position remains one of the healthiest in the G7.
Several global banks — including RBC, UBS and Capital Economics — have added the Canadian dollar to their appreciation forecasts for 2026. Rosenberg says
