Canadian portfolio investment in foreign securities fell to $3.9bn in March, down from $25.36bn in the previous period. The figures show a sharp slowdown in Canada’s cross-border purchases of overseas securities.
The data refers to portfolio investment, which tracks transactions in marketable financial assets such as shares and bonds. The release reports dollar values for March and the prior reading only, without further breakdown in the statement.
The sharp drop in Canadian portfolio investment in foreign securities to $3.9 billion is a major signal of capital repatriation. This suggests a significant shift in sentiment, where Canadian investors are bringing money home rather than sending it abroad. We see this as a clear bullish indicator for the Canadian dollar.
In the coming weeks, we should consider positioning for a stronger loonie against the US dollar. The USD/CAD currency pair has already shown weakness, dipping below the 1.3400 level that acted as support for much of late 2025. Buying puts on USD/CAD or selling out-of-the-money calls could be an effective strategy to capitalize on this trend.
This repatriated capital will likely find a home in domestic markets, providing a tailwind for Canadian equities. The S&P/TSX 60 has already outperformed the S&P 500 by over 3% this year, and this flow of funds could extend that trend. We should look at call options on broad Canadian index ETFs to gain exposure to this potential upside.
The underlying driver appears to be diverging central bank policy, a theme we’ve watched develop since the start of the year. Current interest rate futures are pricing in a 75% chance of another rate hike by the Bank of Canada this summer, while the US Federal Reserve is expected to remain on hold. This rate differential makes holding Canadian assets more attractive.
Looking back at the market uncertainty during late 2025, we saw a similar, though less pronounced, preference for domestic assets. The current data shows an acceleration of that behavior, suggesting a durable trend is forming. This implies that defensive positioning in Canadian assets and a bullish stance on the CAD is the prudent approach for now.
