FX.co ★ Canadian Dollar Trades Near 6-Month High on Liberal Win

The Canadian dollar was pegged at 1.38 against the US dollar, hovering near its highest level in six months. This strength among G10 currencies was fueled by a shift away from US dollar assets. Market participants evaluated the implications of domestic economic policies following the Liberal Party's recent election victory in Canada. Although the Liberal Party secured its fourth consecutive win, the margin was narrower than anticipated, which exerted slight pressure on the Canadian dollar, as expectations of a majority were unmet. Nevertheless, the election outcome placed former Bank of Canada and Bank of England Governor Mark Carney as Prime Minister, leading a minority government. The Prime Minister has notably not prioritized negotiations for a trade agreement with the United States, instead emphasizing Canada's advantage by pursuing trade deals with other countries. Concurrently, the Bank of Canada (BoC) has warned that unpredictable trade policies from the United States could potentially drive Canada into a recession if aggressive tariffs are implemented. Moreover, the BoC indicated that the de-escalation of trade tensions could result in widespread economic stagnation.