Canada’s New Capital Playbook: How five key sectors show what’s possible
The desk views Canada's evolving capital landscape as a pivotal opportunity for investment, particularly in sectors highlighted by the RBC and McKinsey report. The findings indicate Canada is gaining traction in attracting foreign capital, making it increasingly competitive with global peers. This trend could be further amplified if the country leverages its strengths in key areas, as outlined in the source commentary. Per the full note , the report underscores Canada's robust positioning in future-focused sectors, unlike other jurisdictions with slower growth trajectories.
What the desk is arguing
The desk argues that Canada is strategically positioned to attract investment, which could bolster the CAD against other currencies. This perspective is rooted in the comprehensive analysis provided by RBC in collaboration with McKinsey, which identifies five competitive sectors that could significantly enhance Canada's economic landscape.
Evidence from the report points to the fact that Canadian sectors are comparatively well-equipped to harness capital inflows, thus signaling a proactive approach to economic growth. As noted, Canada’s competitive edge makes it an attractive alternative for investors reassessing their portfolios amidst global uncertainties.
Where it sits in our coverage
The current consensus target for USD/CAD stands at 1.075, with a range between 1.04 and 1.12. Specific target forecasts include: - jpmorgan: 1.10 (Mar26) - bofa: 1.04 (Mar26)
This view aligns with the upper bound of the consensus range, positioning the desk’s outlook at a more bullish stance compared to bofa. The CAD's potential for appreciation is supported by strong investment signals despite global economic headwinds.
How other firms see it
Firms like jpmorgan and others share a similar bullish outlook regarding the CAD's potential against the USD, citing favorable economic indicators. Meanwhile, bofa offers a more cautious perspective, reflecting concerns around potential headwinds affecting the CAD.
Key indicators to monitor include treasury yield differentials and global commodity price movements, as these factors are tightly linked to Canada's economic performance and investment attractiveness.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01Canada's attractiveness for foreign investment is growing, particularly in key sectors.
- 02RBC and McKinsey's analysis highlights Canada's competitive advantages.
- 03The CAD may strengthen as investors reallocate capital to Canada.
- 04Current consensus targets suggest a range with potential for upward movement.
Market implications
Market participants should watch for supportive signals around investment inflows into Canada that could signal a shift in CAD positioning. Levels above 1.075 could lead to further bullish momentum amid improved capital attraction narratives.
Risks to this view
A reversal could be prompted by unexpected economic downturns or geopolitical tensions affecting investor confidence in Canadian assets. Additionally, a more dovish stance from the Bank of Canada could dampen the currency's strength.
RBC Royal Bank View Online Dear Brian Ahead of the Canada Investment Summit in Toronto next week, RBC Thought Leadership and McKinsey & Company teamed up to assess the new global map of capital and Canada’s place in it. The result is a new major report – Canada’s New Capital Playbook: How five key sectors show what’s possible. This unprecedented project is built on the McKinsey Global Institute’s seminal report, Catalyzing competitiveness: Where investment happens and why.
Over the past three months, research teams from both organizations joined forces to better understand how investors might assess Canada when deciding where to put their next dollar of capital. As the report illustrates, Canada is quite competitive with its peers, particularly when it comes to some key future-focused sectors. Read the full report We encourage you to share this message with your network and ask them to join our mailing list to get in-depth research on the big ideas that can drive Canada’s economic prosperity. - Please do not respond to this email as this inbox is not monitored.
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Sources & References
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