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"The Loonie to remain G10’s black sheep," says a new assessment from ING Bank that points to ongoing underperformance by the Canadian Dollar.
In a regular currency briefing, ING says "as the USD shed some post-Fed gains at the start of this week, the Canadian dollar again stood out as an underperformer."
The reason for this weakness is a set of subdued fundamental indicators, says ING analyst Francesco Pesole.
"The worsening jobs market, trade uncertainty and possibility of more Bank of Canada rate cuts should keep weighing on CAD against the rest of G10," he explains.
The Canadian dollar is the second-biggest loser in the G10 currency grouping in 2025, second only to the U.S. Dollar.
Another factor behind CAD softness is falling oil prices, which lower Canada's foreign exchange earnings. ING says the fall in prices benefits energy consumers - such as European currencies - at the expense of commodity currencies, most notably the CAD.
Curiously, other energy exporters aren't faring so badly, for instance, Norway's Krone:
"The Canadian dollar was again a negative standout in G10. That, in our view, continues to mirror how unattractive the loonie is, also relative to currencies that have similar sensitivity to external drivers (e.g., the rest of the $-bloc and the Norwegian krone), as domestic downside risks in Canada mount," says Pesole.
Above: CAD performance in 2025.
The particular headwinds blowing against the CAD include another Bank of Canada interest rate cut before year-end, confirming the currency to be saddled by a central bank that will lower rates further.
Further rate cuts would be tied to a deterioration in the domestic labour market, which ING says is strictly tied to uncertainty about trade relationships with the U.S., which, by admission of the Bank of Canada, are unlikely to improve given the looming USMCA renegotiation.
This links Canada's fortunes to that of the USA, which also underpins the view that CAD exchange rates are tending to follow the GBP/USD. It is why CAD occupies the bottom of the G10 ladder with the USD in 2025.
It explains why GBP/CAD's fortunes are tied so intimately to those of GBP/USD.
"CAD's exposure to worsening U.S. macro sentiment, paired with unfavourable seasonality relative to peers like the Aussie dollar, points to further relative underperformance into year-end," says Pesole.