Rosenberg Research: Three reasons why the Canadian dollar will plummet to nearly 60 cents by the end of next year
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- Rosenberg Research projects the Canadian dollar will weaken to C$1.50 first, then toward C$1.60 (62.5 US cents) by end of 2027 — a level last reached in March 2002 during the SARS crisis.
- The firm cites three pressures: Canada's secular productivity challenges, trade-related uncertainty after the US chose not to renew USMCA on July 1, and the Bank of Canada cutting rates while the Fed holds or tightens.
- Canadian unit labor costs rose 3.2% over the past year versus roughly flat in the US, ballooning 8% in USD terms to near an all-time high — the math requires the loonie to weaken to C$1.50 to close the competitiveness gap.
- Since the 2018 US corporate tax cut, Canada has recorded C$850 billion in net direct investment outflow against just C$560 billion in foreign direct investment inflow — a gap exceeding -30%.
- US productivity grew +2.8% YoY in 2026Q1 while Canadian productivity contracted -0.6%, and US investment in machinery, equipment, R&D, and software surged 22.5% since 2022 versus Canada's +3.0% — a seven-fold growth spread.
- The Bank of Canada's April Monetary Policy Report reduced Canada's potential output growth through 2028 while revising it up for the United States, signaling persistent structural downward pressure on the loonie.
- CME Commitment of Traders data for the week of June 23 shows non-commercial investors built net short loonie positions to a near-record 147,464 contracts — nearly quadrupled since end of April — suggesting short-covering rallies should be faded.
Why it matters: Canadian households face eroding real purchasing power as the loonie acts as the pressure-relief valve for structural competitiveness gaps — C$290 billion more in investment outflows than inflows since 2018. The Bank of Canada's own April report cut Canada's potential output growth while raising the US estimate, confirming the currency has persistent structural headwinds.
