Report published August 26, 2026
The Canadian Dollar Has Further to Fall on Tariff Chaos – ING FX Strategy
Source and citation context
- Issuer
- ING
- Report date
- August 26, 2026
- Analysis as of
- Not stated in source
Authors / editors: Francesco Pesole, James Knightley
Finvaulta summarizes ING's analysis. Attribute opinions, forecasts, time-sensitive values, and chronology to the issuer and report date; do not treat this page as an independent verification or a current market-data source.
ING expects the Canadian dollar to underperform G10 peers as markets price in tariff chaos and dovish Bank of Canada rate expectations. While USD/CAD has near-term upside to 1.3920–1.3950, broader USD weakness should cap the pair near 1.39 at end-3Q and 1.38 at end-4Q.
Key Takeaways
- 1.CAD is expected to underperform most G10 peers (notably AUD and NOK) in coming months due to dovish Bank of Canada repricing and an escalating tariff risk premium.
- 2.Following the collapse of negotiations on 22 August, the US enacted 50% tariffs on ~$20bn of Canadian goods, with Canada retaliating dollar-for-dollar on steel and aluminium effective 8 September.
- 3.USD/CAD has near-term upside room toward 1.3920-1.3950 as it trades below short-term fair value, but longer-term gains will likely be capped by broader USD weakness (forecasts: 1.39 for end-3Q and 1.38 for end-4Q).
Table of Contents
- What’s happened and where we stand – in a nutshell
- Growth headwinds re-intensify
- CAD reaction contained, why?
- CAD weakness has been limited
- Cost of hedging CAD remains contained
- CAD can drop further against G10 peers
- USD/CAD still looking mildly cheap
- USD/CAD may be capped by USD weakness
- Author
- Disclaimer
Report data
CAD weakness has been limited
| Metric | Estimate | Context |
|---|---|---|
| US Tariffs on Canadian Goods | 50% | Implemented on roughly USD 20bn of Canadian goods following collapse of negotiations |
| Canadian Retaliatory Tariffs Value | 20 USD bn | Dollar-for-dollar retaliatory tariffs including 50% levies on steel and aluminium |
| Market Pricing for Bank of Canada Cumulative Rate Hikes (April 2027) | 44 bp | Down from 63bp priced at the start of the week |
| Canada 3-Month Job Gains | 181100 jobs | Added over past 3 months after losing 112,300 in the first 4 months |
| USD/CAD Forecast End-3Q | 1.39 exchange rate | ING forecast for USD/CAD at end of 3Q |
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THINK Economic and Financial Analysis is shown in chronological order through this edition, published on August 26, 2026.
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Authors / Editors
Reported Data Context
- US Tariffs on Canadian Goods: 50 % (August 2026)
- Canadian Retaliatory Tariffs Value: 20 USD bn (8 September 2026)
- Market Pricing for Bank of Canada Cumulative Rate Hikes (April 2027): 44 bp (August 2026)
- Canada 3-Month Job Gains: 181100 jobs (Past three months)
- USD/CAD Forecast End-3Q: 1.39 exchange rate (End-3Q 2026) · Source: ING
Securities
Themes
Regions
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