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The etymology of "Canuck" is unclear. Possibilities include:
The use of "Canuck" by Canadians themselves could be, and usually is, nationalistic or patriotic. Prominent examples of such use:
Despite being superheroes, Johny Canuck and Captain Canuck possess no superpowers. Canada Post released in 1995 45-cent stamps of them.
Its use parallels to that of some other potentially offensive nicknames, that is, when used by the name recipients -- Canadians in this case -- themselves, it is usually acceptable. But when being used by an outsider -- in this case, particularly American strangers -- it can be easily misinterpreted and deemed as insults of one's heritage. Although it is not as severe as most ethnic slurs, some consider it one.
One of the first uses of "Canuck" -- in the form of "Kanuk"-- specifically referred to "Dutch-Canadians" as well the French.
"Canuck" also have the rare derived meanings of a Canadian pony and a French-Canadian patois² (very rare).
A Canuck Avenue exists in Toronto.
Reference
¹ The Oxford Companion To The English Language
² OED
See also: Yankee, a nickname for "an American".
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