Attractiveness of Canadian dollar for investors decreased due to US tariff policy — ING

Over the month, the Canadian dollar has shown the strongest performance among G10 currencies, according to Investing.com. This trend stems from unexpectedly high inflation and economic growth figures, prompting the Bank of Canada to maintain interest rates during its June 4 meeting. However, ING analysts view the loonie's prospects as less attractive compared to other G10 currencies.

While the USDCAD pair has seen temporary declines amid weakening demand for the US dollar, the outlook for the Canadian currency remains unfavorable.

ING assesses that Canada's economic growth risks remain skewed to the downside. The financial group anticipates the Bank of Canada may need to implement rate cuts as early as July.

Markets currently price in approximately 8 basis points in rate cuts for July, with September expectations at around 15 basis points. ING experts predict a dovish policy shift that could exert additional downward pressure on the Canadian dollar's exchange rate.