ING keeps a mildly bearish profile for USD/CAD into year‑end, driven mainly by expected Dollar weakness once the Federal Reserve resumes cutting in 3Q. Canada’s domestic backdrop is less supportive, with the Bank of Canada worried about upcoming USMCA talks and jobs. They see scope for USD/CAD to revisit 1.36 if Oil stays above pre‑war levels and risk sentiment improves.

Loonie supported more by Fed than domestic story

"We are keeping a modestly downward-sloping profile for USD/CAD into year-end, primarily on the back of expected USD weakness once the Fed resumes cutting (we think in 3Q)."

"Higher oil prices help growth, but the Bank of Canada remains very worried about upcoming USMCA negotiations and the impact on jobs."

"We don’t think they’ll hike despite markets pricing in c.30bp by year-end."

"A scenario where oil lands above pre-war level but a de-escalation still allows global risk sentiment to improve can send USD/CAD back to 1.36 before USMCA risk rises."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)