07:01 AM EDT, 09/23/2025 (MT Newswires) -- Lower oil prices led investors to favor European currencies over commodity-linked peers Monday, with the Canadian dollar (CAD or loonie) again underperforming among the G10, ING said.

The loonie remains less attractive than other dollar-bloc currencies and Norway's krone as domestic downside risks in Canada build, the bank added.

The Bank of Canada looks likely to cut rates once again by year-end, with risks skewed to an additional cut, taking rates to 2%, stated ING. The deterioration in the labor market is strictly tied to uncertainty about trade relationships with the United States, which, by admission of the BoC, are unlikely to improve given the looming USMCA trade deal renegotiation.

CAD's exposure to worsening U.S. macro sentiment, paired with unfavorable seasonality relative to peers like the Australian dollar, points to further relative underperformance into year-end, added the bank.

USD/CAD should still make its way back to 1.370 in Q4 on the back of US dollar (USD) weakening, but the bearish argument for the pair isn't that "compelling," according to ING.