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$1.60 (62.5 US cents) by end of 2027, calling the loonie "in a fundamental bear market" and advising investors to fade intermittent rallies.
- Canada's unit labor costs rose 3.2% over the past year versus roughly flat in the US, ballooning 8% in USD terms near an all-time high — the math Rosenberg says justifies further CAD depreciation to close the competitiveness gap.
- US productivity growth hit +2.8% YoY in 2026Q1 while Canadian productivity contracted -0.6%, with US investment in machinery, equipment, R&D, and software up 22.5% since 2022 versus Canada's +3.0% — a seven-fold growth spread.
- Since the 2018 US corporate tax cut, C$850 billion in net direct investment has flowed out of Canada, while foreign direct investment inflow totaled just C$560 billion — a gap Rosenberg blames on Ottawa's failure to close the tax rate gap.
- USMCA was not renewed on July 1, opening years of annual trade negotiations and elevated investment uncertainty, layered on top of a chronic Canadian export stagnation — Canadian exports in volume terms are no higher than seven years ago.
- CME Commitment of Traders data for the week of June 23 shows non-commercial investors built net short positions on the loonie to a near-record 147,464 contracts, nearly quadrupled since end of April — setting up a possible short-covering rally Rosenberg still recommends fading.
Why it matters: Canadian households face eroded real purchasing power as the loonie is forced lower to act as a competitive crutch for lagging domestic productivity — Rosenberg's analysis assumes no fiscal response from Ottawa, making the C$1.60 target dependent on continued political inaction on the tax competitiveness gap that has already driven C$850 billion in capital out of the country since 2018.
