07:40 AM EST, 11/12/2025 (MT Newswires) -- The Canadian dollar (CAD or loonie) has performed poorly once again this year, said Commerzbank.

Only the Japanese yen (JPY) and the New Zealand dollar (NZD) have appreciated less against the US dollar (USD) than the CAD after a period of weakness in recent months, wrote the bank in a note to clients.

The reasons for this are clear: the Canadian real economy is suffering greatly from United States tariffs, prompting the Bank of Canada to cut interest rates further.

However, the CAD is also indirectly affected by the tariffs, stated. If the U.S. economy weakens, Canada will suffer too, due to the close links between the two countries' economies. In short, Canada is being hit twice as hard as other countries.

Commerzbank expects this to continue in the coming year. Although the bank estimates the Canadian real economy to stabilize, this will likely be at a weak level.

Plus, while the labor market will have to cope with a lower labor supply, it is still likely to be affected by the poor outlook. There is a clear risk that this situation will persist until a deal can be reached with the U.S., pointed out Commerzbank.

Nevertheless, the bank predicts lower USD/CAD levels. This is mainly due to Commerzbank's expectation of a weaker US dollar, given the attacks on the Federal Reserve's independence and the significant interest rate cuts that the bank forecasts.

Basically, Commerzbank expects this year's trend to continue. The CAD is likely to strengthen against a weak US dollar, but will probably continue to struggle against other currencies.