CAD: Broadly unattractive – ING

The Canadian Dollar (CAD) has been one of the best performers in the G10 over the past month, helped by some stronger-than-expected inflation and growth data that ultimately led to a Bank of Canada hold on 4 June, ING's FX analyst Francesco Pesole notes.

USD/CAD may face periods of downward pressure

"While USD/CAD may still face periods of downward pressure on the back of lacklustre USD demand, the loonie does not look attractive in other G10 crosses. The new US metal tariff hikes disproportionally hit Canadian exporters, and there are no indications of imminent high-level trade negotiations with the US."

"Growth risks remain heavily tilted to the downside in Canada, and we believe the Bank of Canada will need to react, possibly by cutting rates as soon as July."

"Markets are pricing in only 8bp for July, and 15bp for September, so we see scope for a dovish shift in the CAD curve that, when adding the risks of exposure to more potential deterioration in US sentiment, makes the loonie one of our least favourite currencies in G10 at the moment."