If you’re checking your banking app this morning and wondering why the loonie feels a bit light, you aren't alone. As of January 16, 2026, the Canadian dollar is trading at approximately $0.72 USD.
It’s a number that looks underwhelming on a screen, but the "why" behind it is a messy mix of oil prices, trade anxiety, and a central bank that’s currently playing a very intense game of "wait and see." Honestly, the value of a currency is never just about one thing. It’s a mood ring for the entire country's economy.
Right now, the mood is... complicated.
What is the Canadian dollar worth today?
To give you the straight goods: one Canadian dollar gets you about 72 cents in American greenbacks. If you’re heading across the border for a weekend in Seattle or Buffalo, that exchange rate hurts. It means a $100 USD hotel room is actually costing you about $139 CAD before you even factor in those annoying credit card conversion fees.
But why is it stuck here?
Currencies usually move because of "interest rate differentials." Basically, investors are like high-schoolers looking for the party with the best snacks. If the U.S. Federal Reserve offers higher interest rates than the Bank of Canada, money flows south. Right now, the Bank of Canada has its benchmark rate sitting at 2.25%. Meanwhile, the Americans are holding theirs a bit higher, around 3.5% to 3.75%.
When the U.S. pays you more just to hold their cash, the Canadian dollar naturally loses its luster.
The "Petrodollar" Reality in 2026
We can't talk about the loonie without talking about oil. We’re a resource economy; it’s in our DNA. When global oil prices are high, the CAD usually flies. When they dip, we dip.
In early 2026, we’re seeing a bit of an "oil glut." There's plenty of supply, but global demand is stuttering. This puts a ceiling on how high our dollar can climb. Even if everything else in Canada was perfect—which, let's be real, it isn't—low oil prices act like a lead weight on the loonie's ankle.
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Why the Loonie is Stuck in the Waiting Room
There’s a massive cloud hanging over Ottawa right now: trade.
Specifically, the upcoming renegotiation of the CUSMA (the Canada-United States-Mexico Agreement). You’ve probably heard the headlines about tariffs on steel, aluminum, and autos. Those aren't just political talking points; they are market movers.
Investors hate uncertainty.
When people aren't sure if Canadian exports will face a 10% or 20% tax at the border next month, they don't buy Canadian dollars. They wait. This "trade anxiety" is arguably the biggest reason the CAD isn't pushing back toward the 75-cent mark.
Interest Rates: The Bank of Canada’s Hard Pivot
It’s wild to think that just a couple of years ago, we were talking about rates hitting 5%. Now, we’re at 2.25%. The Bank of Canada (BoC) basically signaled in December that they are done cutting for now. They think 2.25% is the "neutral" spot—not too hot, not too cold.
Most big bank economists, like those at RBC and TD, are betting that the BoC won't budge for most of 2026.
- RBC's View: Expect a hold at 2.25% through the end of the year.
- Scotiabank's Twist: They think we might actually see hikes in the second half of 2026 if inflation gets sticky again.
- The Market Reality: Traders are currently pricing in an 88% chance that nothing changes at the next meeting on January 28.
The Human Cost of a 72-Cent Dollar
If you’re a Canadian consumer, a weak dollar is a double-edged sword.
First, the bad news: Inflation at the grocery store. A lot of our fresh produce comes from California and Mexico, priced in USD. When our dollar is weak, those strawberries and avocados get expensive fast. Even though headline inflation has "cooled" to around 2.2%, anyone who buys groceries knows it doesn't feel like 2%.
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Now, the "silver lining": Manufacturing and Tourism.
A lower loonie makes Canadian-made goods cheaper for Americans to buy. If you’re a furniture maker in Quebec or a tech firm in Waterloo, your services just got a "discount" for your international clients. It also makes Canada a bargain for tourists. If you live in a tourist town like Banff or Niagara Falls, a 72-cent dollar is actually great for business because it brings in the big spenders from south of the border.
What Most People Get Wrong
People often think a "strong" dollar is always better. It’s not that simple.
If the Canadian dollar hit parity with the USD tomorrow (meaning $1 CAD = $1 USD), our export economy would likely collapse. Our film industry in Vancouver would vanish. Our manufacturing sector would stall. The "sweet spot" for the Canadian economy is usually cited by experts as being somewhere between **$0.75 and $0.80 USD**. We’re currently below that, which suggests the economy is underperforming its potential.
Is a Recession Actually Coming?
There’s a lot of pessimism lately. A recent MNP survey suggested that nearly 60% of Canadians expect the economy to get worse this year.
But look at the data, not just the vibes.
Canada’s unemployment rate recently hit a 16-month low of 6.5% (though it ticked up slightly to 6.8% in December). We added over 50,000 jobs in November alone. That’s not what a "collapse" looks like. It looks more like a "structural adjustment."
We are moving away from an economy fueled by rapid population growth and moving toward one that has to rely on productivity. It’s a painful transition. It’s slow. But it’s not necessarily a disaster.
How to Protect Your Wallet Today
Since the loonie is likely going to hover in this 71-to-73 cent range for the foreseeable future, you need a plan. Don't just sit there and let the exchange rate eat your savings.
1. Watch the Bank of Canada on January 28
This is the next big date. If Tiff Macklem (the Governor of the BoC) sounds "hawkish"—meaning he’s worried about inflation—the dollar might jump. If he sounds "dovish"—meaning he’s worried about growth—the dollar could slide further.
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2. Hedge Your Travel
If you have a trip planned for later this year, don't wait for the "perfect" rate. It might not come. Consider buying a portion of your USD now to lock in the 72-cent rate, then buy the rest later. It’s called "dollar-cost averaging," and it saves you from the stress of a sudden 2-cent drop.
3. Rethink Your Investments
If your portfolio is 100% in Canadian stocks (the TSX), you’re missing out. When the CAD is weak, your U.S. investments (like the S&P 500) are actually worth more when converted back to Canadian dollars. It’s a natural hedge.
4. Shop Local (Seriously)
Every time you buy something from a U.S. website, you’re paying a premium right now. Check Canadian retailers first. You’d be surprised how often the "cheaper" American price ends up being 40% more expensive after exchange rates, shipping, and duties are added.
Moving Forward
The Canadian dollar isn't "broken." It’s just reflecting a country that is currently navigating some very choppy waters. We have a cooling housing market in Ontario and B.C., a massive trade negotiation on the horizon, and a global energy market that can't quite make up its mind.
For the next few months, don't expect the loonie to pull off any miracles. It's likely going to stay right where it is—somewhere in the low 70s—until we get some clarity on U.S. trade policy.
Actionable Insight: Check your mortgage renewal date. With rates held at 2.25%, the "relief" many were hoping for has mostly already happened. If you’re renewing in 2026, don't hold out for 1% rates—they aren't coming back. Secure your budget around the current 3.9% to 4.3% fixed-rate range that is currently dominating the market.
Keep an eye on the January 28 Monetary Policy Report. That document will be the "map" for where the loonie goes for the rest of the spring.