USD/CAD trims losses as Canadian TV projects a win for the incumbent government

• USD/CAD is trimming gains on reports calling a victory for Canada’s PM Trudeau.  
• The CAD may come under pressure if Trudeau forms a minority government with NDP’s support.  

The USD/CAD pair is recovering losses on reports stating that Canadian Prime Minister Trudeau is likely to win the second term.

The currency pair is currently trading at 1.3085, representing marginal losses on the day, having hit a three-month low of 1.3071 earlier today.

Canadian TV, CBC, is suggesting Canadian Prime Minister Justin Trudeau is set to secure a second term, although it is unclear whether he will be able to command an outright majority or will have to rely on other parties to govern.

A minority government supported by the anti-pipeline New Democratic Party (NDP) would be bad news for Canada’s energy sector. The Canadian Dollar, therefore, may come under pressure if Trudeau ends up forming a minority government with NDP’s support.

That said, historically Federal elections have not had a significant impact on the underlying trend in the CAD, according to Scotiabank’s Shaun Osborne. So, gains in the USD/CAD, if any, could be short-lived, as the currency pair is on a strong downward trajectory, according to technical charts.

Technical levels