USD/CAD: Bears in control ahead of election results

• Today is election day in Canada and Loonie is firm ahead of the results.
• USD/CAD last traded this low in summer of 2019, (July).

USD/CAD has been on the backfoot, travelling from a high of 1.3138 to a low of 1.3085 at the start of the week so far. The slide leaves the downside exposed following a break of the September lows in the 1.3130s.

USD/CAD last traded at these levels in the summer, (July),    and it would appear that  the Loonie is firm in its own right considering the DXY is also on a firmer footing at the start of the week, higher by 0.17% at the time of writing. Then, looking to the energy markets, the US benchmark, Western Texas Intermediate crude, (WTI), has fallen to a low of $52.70, down some 0.70% at the time of writing.

Reports that an agreement on the neutral zone could be signed between Kuwait and Saudi Arabia in the coming months, with a short lag expected for production to start, is weighing on market sentiment, analysts at TD Securities explained.  “Oil markets will likely see a steep surplus on the horizon, despite a potential rebound in growth in 2020, which presents a challenge for oil bulls despite tanker war fears, supply disruptions (both structural and temporary) and boiling geopolitical tensions.”

In any  case, the Loonie is deriving its strength elsewhere, and today is election day.

Canadian election time  

Today is election day whereby the  polls for both parties had tightened considerably into the final stretch. “The bulk of the country will see polling stations close at 21:30 ET but with several toss-ups on the west coast, it is unlikely we will know anything conclusive before BC polls close at 22:00 ET,” analysts at TD Securities  explained.

“Recent polls are  tilted heavily towards a minority, with the Liberals and Conservatives in a virtual tie. Should neither party win a majority, the government will need to rely on ad-hoc arrangements to survive confidence motions. However, if neither party can viably govern, it would open the door to a formal coalition or a hasty return to the polls.”

USD/CAD levels