05:59 AM EDT, 10/24/2025 (MT Newswires) -- The Canadian dollar (CAD or loonie) came under some pressure overnight Thursday after United States President Donald Trump announced he's ending all trade negotiations with Canada as retaliation for an Ontario-sponsored anti-tariff advertisement, said ING.

Some might be surprised by the relatively small (0.2%) jump in USD/CAD on the news, but in reality there had been little to no progress on U.S.-Canada trade talks so far, and the pair was already trading at over 2% short-term overvaluation in the bank's short-term fair value estimate before Trump's post.

But if anything, ING thinks that this development slightly increases the chance of another Bank of Canada rate cut next Wednesday.

The bank expects a 25bps reduction, broadly in line with consensus and market pricing (18bps), as trade uncertainty and existing U.S. tariffs are weighing heavily on Canadian businesses' investment and hiring plans.

The worrisome picture for activity and jobs should, in ING's view, prevail over hotter-than-expected September inflation numbers and convince the BoC to cut again.

The bank also believes it'll be hard for the BoC to close the door on more easing already, which should keep the Canadian dollar weak in the crosses. USD/CAD faces upside risks in the near term, where explorations above 1.410 remain very much possible.

But by year-end, ING still thinks US Dollar (USD) weakness can drag the pair back towards 1.38.