You’re staring at your screen, looking at that $86.26 figure, and wondering where the rest of your money went. It’s a classic cross-border headache. Whether you’re buying a pair of boots from a boutique in Montreal or trying to settle a PayPal invoice for a freelancer in Toronto, seeing 120 CAD in USD can feel like a bit of a gut punch.
As of January 18, 2026, the math is straightforward but the "why" is messy. At the current mid-market rate of approximately 0.7188, your 120 Canadian dollars are worth about $86.26 USD.
But here is the catch: you are almost never going to actually get $86.26 in your bank account.
The Invisible "Tax" on Your 120 CAD in USD
Most people check Google, see the number, and then get annoyed when their bank statement says something different. It isn't a conspiracy. It’s just how the retail currency market works.
If you use a traditional big bank—think RBC or Chase—they aren't giving you that 0.7188 rate. They’re taking a "spread." Essentially, they buy the currency at the mid-market price and sell it to you at a 2% to 4% markup. On a small amount like 120 CAD, that's only a few bucks. But if you're doing this regularly, you're basically leaving a nice lunch on the table for the bank every single time.
Then there are the "hidden" fees. Credit cards often tack on a 2.5% foreign transaction fee. So, by the time the dust settles, that $86.26 USD might actually cost you closer to $89 or $90 USD in total purchasing power, or you'll receive less if you're the one selling the CAD.
Why the Loonie is Hovering Around 71 Cents
The Canadian dollar, affectionately known as the loonie, is a bit of a drama queen. It’s a "commodity currency." This means its value is tied at the hip to the price of oil. When West Texas Intermediate (WTI) crude is booming, the loonie usually catches a ride.
But right now, in early 2026, we’re seeing a bit of a standoff. The Bank of Canada has held its key interest rate steady at 2.25%, while the U.S. Federal Reserve is sitting higher at a range of 3.50% to 3.75%.
Money is like water; it flows where the "heat" (interest) is highest. Because U.S. rates are higher, investors would rather park their cash in American bonds. This keeps the USD strong and keeps your 120 CAD in USD conversion lower than many Canadians would like.
The Trade War Shadow
You can't talk about the CAD/USD exchange rate right now without mentioning trade. Canada exports a massive amount of its goods to the States. We're talking about roughly 75% of everything they make.
Recent friction over trade treaties and potential tariffs has made the markets nervous. When investors get nervous about Canada’s ability to sell stuff to its neighbor, they sell the currency. This "uncertainty discount" is part of why you're getting $86 and not the $90 or $95 we saw in better years.
Real-World Examples: What 120 CAD Actually Buys
Sometimes the raw numbers don't tell the story. Let's look at the "purchasing power parity" in a way that actually makes sense for your wallet.
- The Dinner Date: In a city like Vancouver, 120 CAD gets you a very nice dinner for two at a mid-range spot with a bottle of wine. In Seattle or Portland, that $86.26 USD probably covers the same meal, but you might have to skip the fancy dessert once you factor in the tip and the USD's higher face-value prices.
- The Gas Tank: If you're crossing the border to fill up, you'll notice the discrepancy immediately. Even though your CAD is "weaker," gas prices in the U.S. are often low enough that your $86 USD goes significantly further at a pump in Buffalo than 120 CAD does in Niagara Falls.
- Subscription Services: If you're paying for a software sub that bills in USD, that 120 CAD is your "budget ceiling." If the service costs $99 USD, you're actually short. You'd need about 138 CAD to cover it.
Stop Using Your Local Bank for Conversions
Seriously. If you are converting 120 CAD in USD or any larger amount, stop going to the teller window at the mall.
Services like Wise (formerly TransferWise) or Revolut use the actual mid-market rate. They charge a transparent fee—usually less than a dollar for a transaction of this size—rather than hiding a 3% fee inside a bad exchange rate.
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If you're a business owner, look into Norbert’s Gambit. It’s a bit of a "hack" involving buying a stock that trades on both the Toronto Stock Exchange (TSX) and the New York Stock Exchange (NYSE). You buy it in CAD, ask your broker to "journal" it over to the U.S. side, and sell it for USD. You bypass the bank’s 3% spread entirely. For $120, it’s not worth the effort. For $10,000? It’s mandatory.
What’s Next for the Exchange Rate?
Most analysts at BMO and Scotiabank aren't expecting a massive rally for the Canadian dollar anytime soon. The consensus for the rest of 2026 is "stability." Unless there is a massive spike in oil prices or the Fed starts slashing rates aggressively to 2%, expect 120 CAD to stay in that $85 to $88 USD range.
If you are planning a trip to the States, it might be worth hedging. Don't buy all your USD at once. Buy a little bit every month. This "dollar-cost averaging" for currency prevents you from getting hosed if the loonie takes a sudden 2-cent dive because of a bad jobs report in Ottawa.
Actionable Steps for Your Money:
- Check the "All-in" Price: Before clicking "buy" on a U.S. website, check if your credit card has a 2.5% foreign transaction fee. If it does, add that to the conversion.
- Use a Multi-Currency Account: If you travel often, get a card that lets you hold CAD and USD simultaneously. You can convert when the rate is good and spend when you need to.
- Watch the Tuesday Reports: Exchange rates often wiggle on Tuesday mornings when economic data drops. If you have a choice, wait for the mid-week settle rather than trading on a volatile Monday.
Basically, 120 CAD is a solid chunk of change in Canada, but in the U.S., it’s a shopping trip to Target that ends sooner than you expected. Keep an eye on those interest rate announcements from the Bank of Canada; they are the real steering wheel for your money's value.