The Canadian dollar may be nearly a nickel off its lows, but it remains quite weak relative to the greenback, especially as the Bank of Canada (BoC) continues cutting interest rates as the U.S. Federal Reserve shows more reserve. In any case, the big question moving forward is whether President Trump will get his way, with or without Chairman Jerome Powell in the hot seat at the U.S. Fed.
Though Trump has someone in mind for the next Fed, I do think that the recent weak employment data may be enough for the Fed to make a move lower on rates without any outside influence. Of course, expect Powell and company to stay data-dependent ahead of their next big FOMC meeting.
In any case, I think the odds are rising that the Fed will slash by around 25 basis points come September.
Perhaps Trump will finally get his way without needing to apply any more pressure. As the Fed cuts and BoC stands pat due to lingering food inflation, I do think that the loonie could have legs to gain over the greenback.
Of course, sluggishness in oil prices remains quite the wild card, as does the trade relationship going into year’s end. Perhaps 35% tariffs could escalate, and the loonie could stay under quite a bit of pressure, even as the Fed cuts and the BoC holds off on further cuts. In any case, I remain quite bullish on the Canadian dollar’s prospects going into 2026.
At this juncture, many big banks think the Canadian dollar will be in the US$0.69–0.75 range. However, one notable bull over at Scotiabank thinks that a US$0.78 loonie could be in the cards. Indeed, time will tell. Either way, the factors in play may very well be conducive to the loonie adding another nickel to its value relative to the U.S. dollar.
In this piece, we’ll look at one intriguing growth play to invest in a stronger loonie going into year’s end.
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Aritzia
First up, we have clothing retailer Aritzia (TSX:ATZ), which has been thriving in recent years despite tariffs. With an ambitious expansion underway and growing brand affinity on both sides of the border, I think the $8.2 billion firm is worth sticking with, even as shares appear to be a bit toppy after its most recent post-earnings melt-up. The company has a strong brand and a massive TAM (total addressable market), as well as a proven management team that knows how to execute.
Add a stronger Canadian dollar into the equation, and I think there’s a path for ATZ stock to break out further, perhaps above $90 per share over the next 18 months. At the end of the day, Aritzia makes a vast majority of its revenues from Canadian dollars. As the loonie gains ground over the greenback, the company’s U.S. push will get a nice jolt as costs of opening shop south of the border become somewhat less hefty.
Sure, ATZ shares are already in fashion, but I think this is just the start. There’s room to run in the U.S., and a stronger loonie might just take the latest rally into overdrive. In any case, I find Aritzia to be an industry disruptor that’s perfect for new, young investors.
