We are pleased to bring you the latest edition of the series produced by our colleagues in RBC Capital Markets, hosted by George Davis, CMT, the award winning Chief Technical Analyst for Fixed Income and Currency Strategy. In this installment, George recaps and updates recent changes to his forecast.

 

View the George Davis Report

 

Starting with growth, forecasts for both Canada and the US have been firmed up, moving slightly higher for this year and next. The slightly higher forecast for Canada comes from the fact that the impact of tariffs, so far, have been less than expected with Canada having the lowest average effective tariff rate amongst all US trade partners. In the US, tax cuts from 2017 extended under the ‘Big Beautiful Bill’ serve to put a floor under economic growth helping to offset tariff uncertainty.

 

For monetary policy, George expects the BoC to leave rates unchanged at 2.75% for the rest of the year until there is more clarity on the tariff front. On US rates, expectations for the FOMC to resume rate cuts have been pushed out from September to December.

 

For FX markets, the general outlook has been bearish for the USD since April and is expected to continue given the ongoing tariff uncertainty and FOMC rate cuts starting later this year. George expects USDCAD to end the year around 1.3700 and to continue toward the 1.3100 level by the end of 2026. The expected trading range remains the same month over month with 1.3500/1.3600 at the low end and 1.3900/1.4000 on the topside.