CAD USD Exchange US Dollar Forecast – Outlook for Loonie vs Greenback 2018 Predictions for US Dollar

CAD USD Exchange US Dollar Forecast – Outlook for Loonie vs Greenback 2018 Predictions for US Dollar

What are the USD CAD Exchange Rate Predictions?

The US dollar forecast is predicted to lower against global currencies. However, the CAD has fallen against the greenback recently, which is in demand again.

While the lower US dollar is extremely good for US manufacturing, jobs and exports, it may also have some interesting effects on the US housing market. With shale oil production growing, corporate money being repatriated in the US, and job growth so strong, interest rates are rising. That all spells rising US dollar.

The forecast for the US Dollar vs Canadian Dollar comes with great hope for the Canadian housing market. The outlook for the Loonie is that it will continue its rise in 2018 but so far it looks to be the opposite. The Canadian dollar outlook is hampered by western oil transport issues, high Canadian taxes, and the fear the NAFTA agreement will be cancelled. The potential for the Canadian dollar to fall is high.

The US will likely not experience a housing market bubble 2018.

If NAFTA is fixed, or a new trade agreement with the US is reached, then investors will resume their interest in Canadian business. However, foreign direct investment has been at record lows for Canada and there’s not much to suggest that will change. Currently, the NAFTA agreement is in peril, which could send sell signals for the CAD.

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The rising outlook for the CAD is to rise well beyond 80 cents USD is not good for Canadian business competitiveness or exports. The housing market was supporting the economy yet it has fallen into what some suggest might be a Toronto housing crash in 2018.

There is some hope that with this recent disruption, the government will be forced to reduce controls on housing and begin encouraging construction of new developments.

US property investors might want to search for homes for sale now as capital gains may be strong by June of this year. If US investors want to see higher returns on Canadian sales revenue, the auto parts, lumber, aerospece, oil and gas, vacation rental properties sectors might offer a good return, just for 2018.




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It’s unlikely, that Asian buyers will continue investing as they have. The housing landscape is changing in Canada. Oddly, housing is one sector the Canadian government is relying upon to generate tax revenue and stimulate its economy. US investment in the Canadian housing market could keep it afloat as well as avert potential housing market crashes.

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The rising Canadian dollar has major implications for real estate and entrepreneurial small business startups. In this post, we explore the forecast outlook for the CAD vs USD, the macroeconomic and business factors drive it, and what opportunities American’s can enjoy buying real estate in Canada. The forecast for the US housing market is rosy, but the potential ROI from Canadian real estate is an eye opener in 2018.

Buy American? Wait a Minute, Canada is Really Cheap right now!

One obvious opportunity is the increasing attractiveness and affordability of Canadian real estate for Americans. The rising economic power of US investors means there are a huge pool of buyers with money to spend on homes, condos and land. Sellers will have to compete to be heard in the clamor for American buyers, but a good measure of buyers will be from the US in 2018. By June 2018, US buyers may enjoy a 50% premium on their money based on rising loonie and rising real estate values which have recently plummeted. There’s no market crash here, but prices have taken a big downtown in Toronto and Vancouver.

Is the US Dollar Rising Against Most Other Currencies?

This chart from fred.stlouisfed.org shows the US dollar was rising against most major currencies however that is now reversing. The exchange rate with the loonie is pronounced with it chasing equilibrium. It wasn’t long ago that 1 USD equalled 1 CAD. Speculators are buying Canadian dollars in anticipation of the rise.

Screen Capture courtesy of fred.stlouisfed.org

Longforecast.com is offering its prediction of a more moderate yet lasting fall for the loonie. This chart shows the US dollar will depreciate by 7% in the next 11 months.

USD vs CAD Exchange Rate 2018

Month Open Low-High Close Mo,% Total,%
2018
Jan 1.258 1.209-1.258 1.227 -2.5% -2.5%
Feb 1.227 1.205-1.241 1.223 -0.3% -2.8%
Mar 1.223 1.175-1.223 1.193 -2.5% -5.2%
Apr 1.193 1.175-1.211 1.193 0.0% -5.2%
May 1.193 1.193-1.247 1.229 3.0% -2.3%
Jun 1.229 1.209-1.245 1.227 -0.2% -2.5%
Jul 1.227 1.209-1.245 1.227 0.0% -2.5%
Aug 1.227 1.172-1.227 1.190 -3.0% -5.4%
Sep 1.190 1.137-1.190 1.154 -3.0% -8.3%
Oct 1.154 1.124-1.158 1.141 -1.1% -9.3%
Nov 1.141 1.141-1.188 1.170 2.5% -7.0%
Dec 1.170 1.153-1.189 1.171 0.1% -6.9%

This is one of the windows of opportunity to sell US dollars and buy cheap loonies. If Oil prices continue rising as they have been, the CAD will rise strongly.  Canadians are listing their properties so they’re desperate right now to sell their homes.

The full impact of President Trump’s policies are difficult to foresee, however many experts believe the signals are clear about the US Dollar forecast. It is going to rise against all currencies including the Canadian dollar.

What Macroeconomic factors are driving the USD/CAD Rate?

  1. higher interest rates expected in the US will drive US dollar up
  2. US bonds will become more attractive as will American company stocks
  3. lower interest rates will keep CAD same or will be reduced in order to maintain business competitiveness
  4. oil & gas production rising in US thus raising supply and driving price down which will lower demand for Canadian oil and gas
  5. rising trade barriers and border taxes will reduce Canadian trade advantage thus discouraging multinational corporations who can’t make winfall profits anymore or move their wealth fast to avoid taxes
  6. rising US productivity, jobs, startups, and speculation will pull investment money into the US thus raising demand on US dollar
  7. rising consumer spending power will raise US inflation

Photo courtesy of the TorontoStar

With the lower loonie, the Canadian economy should benefit greatly, yet Justin Trudeau will need to negotiate what access Canadian companies will have to US markets. Trump is already cancelling the TPP and NAFTA agreements. Canadian companies will only look good on the basis of their cost advantage selling to the US.  If negotiations don’t go favorably for Canada, we could see a Vancouver and Toronto housing crash.  That’s a long shot, but risk is risk. We won’t see a crash in US housing markets.




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