Been watching the USD/CAD movements pretty closely lately, and Scotiabank's analysis from last year really nailed what's been driving this bullish trend. The pair keeps trading well above what the models suggest is fair value, and honestly it makes sense when you look at what's happening under the hood. The Fed's been holding rates higher than the BoC, which just keeps pulling capital into U.S. dollar assets. Add in the oil price swings affecting Canada's export revenues and you've got a pretty solid foundation for why the bullish trend has had so much staying power through 2025 and into this year.

What's interesting is how this plays out differently across sectors. Canadian exporters are actually doing okay with the weaker loonie giving them pricing power, but importers are getting squeezed hard on costs. The energy sector's in this weird spot where they're making U.S. dollars on oil sales but paying more for equipment. Even real estate near the border is shifting as investors adjust to the yield differences. The fundamentals really do matter here - it's not just technical momentum, there's actual economic divergence between the two countries driving this.

If you're managing currency exposure, whether you're a business or investor, you've gotta be thinking about hedges and rebalancing. The bullish trend could keep going, but central bank moves, oil price shocks, or geopolitical stuff could flip things around. Worth keeping an eye on what the Fed and BoC signal next because that's probably what breaks this pattern.