USD/CAD up 26 pips to 1.2798 today
MUFG Research discusses CAD outlook and sees a scope for further CAD rebound in the near-term.
"Renewed concerns over the global outlook reinforced recent weakness in the Canadian dollar yesterday as USD/CAD rose sharply to an intra-day high of 1.2896 moving back closer to last month's high of 1.2949. Over the last three months USD/CAD has attempted on multiple occasions but failed to sustain levels above the 1.2800-level. In contrast to more marked weakness in the Canadian dollar recently, the price of oil is continuing to hold up better," MUFG notes.
"The resilience of the price of oil is suggesting that Canadian dollar weakness is overdone in the near-term. It has been reported as well overnight that Prime Minister Justin Trudeau is poised to win a third term following yesterday's snap election although his Liberal party is set to fall short of winning a majority. Even with another minority government, the early results suggest that the Liberals will have a stable government most likely backed by the left leaning New Democratic Party," MUFG adds.
Meanwhile, CIBC also reacts to the Canadian election
"It's out with the old parliament, in with the old parliament, as Canada's federal election left the seat counts almost unchanged from where they were prior to the vote. While ballots are still be counted, the Liberals will remain in charge of a minority government, with the Conservatives, the official opposition. As before, on a bill opposed by the latter, the Liberals need either the support of the Bloc Quebecois or the NDP to assure its passage," CIBC notes.
"We don't expect any notable reaction in the bond or FX markets," CIBC adds.
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