Canadian Dollar Hits 10-Day Peak Amid U.S. Election Market Adjustments
The Canadian dollar climbed to a 10-day high against the U.S. dollar on Monday as oil prices surged, and investors reassessed the likely impact of Tuesday’s U.S. presidential and congressional elections.
The loonie rose 0.4% to trade at 1.3895 per U.S. dollar, or 71.97 U.S. cents, after reaching an intraday peak of 1.3876—its strongest level since October 25.
“The Canadian dollar is outperforming the U.S. dollar in line with a recalibration of odds on a Republican sweep in tomorrow’s U.S. election,” noted Karl Schamotta, chief market strategist at Corpay.
In the close presidential race, Republican former President Donald Trump is competing with Democratic Vice President Kamala Harris. Trump has proposed substantial tariffs on imported goods, which could have significant implications for Canada, as around 75% of its exports go to the U.S.
Analysts warn that Trump’s proposed tariffs and policies could spur U.S. inflation, potentially lowering the chance of Federal Reserve rate cuts. The Fed will announce its latest interest rate decision at the conclusion of a two-day policy meeting on Thursday.
The U.S. dollar weakened against a basket of major currencies as investors withdrew from positions based on expectations of a Trump victory.
Data from the U.S. Commodity Futures Trading Commission on Friday revealed that bearish bets on the Canadian dollar have increased, reaching the highest level since mid-August. As of October 29, net short positions grew to 167,499 contracts from 140,631 the previous week.
Meanwhile, the BC Maritime Employers Association announced a lockout of workers at the Port of Vancouver on Monday after missing a negotiation deadline, a move that could disrupt exports of coal, potash, and beef.
Oil prices, a significant export for Canada, jumped 2.85% to settle at $71.47 per barrel following an OPEC+ decision to delay an output increase by one month.
Canadian bond yields saw mixed results along a flatter yield curve, with the 10-year yield down 3.9 basis points to 3.250%.
