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Karl Schamotta, chief market strategist at says the loonie was already facing strong headwinds prior to recent political drama. “The Canadian dollar’s underperformance has deepened over the last two years,” he wrote in his firm’s 2025 outlook. “Soft commodity prices, subdued investment, and rising household borrowing costs—the heaviest in the G7—are weighing on economic growth, forcing the central bank to ease policy more aggressively than the Federal Reserve.”