USD/CAD: Election jitters could offer a rally to fade – TDS
Previewing the Canadian federal election that will take place on Monday, September 20, TD Securities analysts noted that recent polls give a slight edge to Justin Trudeau's Liberal Party over Erin O'Toole's Conservative.
Key quotes
"Both the Liberal and Conservative platforms call for significant new spending and neither party plans to balance the budget within the foreseeable future. We anticipate a slightly larger near-term economic impact from the Liberal platform, although it would also result in larger deficits from 2023 onward."
"For USDCAD, the election jitters could offer a rally to fade, reflecting scope for less fiscal support or paper-thin governing mandates. That said, global factors remain the key CAD driver, where we like the prospects of reduced growth worries and a lighter form of reflation to emerge through the fall. The result would be another peak in the broad USD, offering an opportunity to fade USDCAD rallies towards 1.28."