CAD: Growth outlook keeps deteriorating - ING

With the exception of the New Zealand dollar (which was hit by a dovish cut from the Reserve Bank), the Canadian Dollar (CAD) has been the worst-performing G10 currency in August, ING's FX analyst Francesco Pesole notes.

Markets are only pricing in a BoC rate cut in December

"We remain bearish on CAD against the euro and European currencies, as well as other commodity currencies, as Canada's deteriorating economic outlook points to more room for Bank of Canada cuts."

"Yesterday, it was reported that Canada's 2Q current account deficit was the largest on record due to a drop in exports to the US. That increases the risk of a sub-consensus 2Q GDP print today: expectations are for a 0.7% annualised quarterly contraction."

"Markets are only pricing in a BoC rate cut in December, but we suspect there are high chances of a September or October move and another cut in 2026 before reaching a 2.25% terminal rate. Given our bearish USD call, we don't expect much support for USD/CAD, but we still expect the loonie to lag other G10 currencies."