Loonie recovers against US Dollar as markets stabilize.
USD/CAD up for the third consecutive day.
The USD/CAD trimmed losses during the American session. After hitting a one-month high at 1.2895, the pair dropped back toward 1.2800. It still remains with a gain of around 50 pips, but significantly off highs.
A recovery in crude oil prices and a stabilization in equity markets, helped the loonie. Also, the greenback corrected lower, pushing USD/CAD to the downside.
Elections are taking place in Canada on Monday. So far, the Loonie remains unaffected by the event and is falling versus the US dollar like the AUD and NZD. PM Trudeau’s Liberals are likely to win around 155 of the 338 seats in the House of Commons.
According to analysts at Brown Brothers Harriman, the failure to win 170 seats would leave Trudeau leading a minority government. “In some ways, this may be the outcome that makes the most sense. That is, voters will reward Trudeau’s handling of the pandemic and allow him to stay in power but will punish him for calling an election in the middle of the pandemic and deny him an outright majority. If so, then there are basically no implications for policy or for Canadian asset markets”.
The USD/CAD is currently being driven by the US dollar and the overall market sentiment amid risk aversion. From Evergrande, attention will turn to the Federal Reserve’s two-day meeting that will start on Tuesday.