Canada is in political turmoil but that’s hardly the driver of the latest leg lower in the Canadian dollar. If anything, odds are improving for a spring election and that’s something the market would smile on.
Unfortunately, what’s weighing on the Canadian dollar won’t be easily fixed by an election. The housing market is struggling and population growth is going into reverse. Job openings are dwindlings and there’s the possibility of a tough employment market in 2025, particularly if automation picks up or a new Conservative government cuts government jobs.
Today, oil prices are declining and equities are down, both typical drivers of Canadian dollar weakness. With that, USD/CAD is up 51 pips to 1.4296 at the moment. The pair briefly rose above 1.4300 for the first time since March 2020.
Looking at the long-term monthly chart, the 2015 and pandemic highs near 1.4680 are looming.
USDCAD monthly