On Monday, September 20, 2021, the Canadian Federal election will take place, to elect members of the House of Commons to the 44th Canadian Parliament. Governor-General, Mary May Simon, issued the writs of the election on August 15, 2021, when the incumbent Prime Minister, Justin Trudeau, requested the dissolution of Parliament for a snap election.
Justin Trudeau, who is a member of the Liberal Party remained in office as a minority government after his party lost both their parliamentary majority and the popular vote but still won the most seats.
The Canadian dollar declined ahead of the federal election as the market opens for the week. After suffering a huge crash last week, the Canadian dollar declined further, approaching its lowest price in August. The US market is yet to open but the market has already priced in. Volatility will increase as the US market opens, and CAD might make a new low as voting commences. Federal elections have a high impact on the financial market and this won't be any different.
The Canadian Dollar started falling against other currencies as the market opened for the week, Price declined further as the London session opened and this might continue as voting commences in Canada.
Brent Crude Oil also crashed as the market opened for the week. The Canadian Dollar has a huge effect on the price of Brent Oil because Canada is the major supplier of oil to the US and one of the largest producers of crude oil in the world. The price of Brent Crude Oil correlates positively with the Canadian Dollar. As the price of crude oil increases, CAD also gains strength against other currencies. Brent Crude Oil has dropped from $75 per barrel to $73.60 as of the publishing time. It's looking to decline further as the US market opens.
USDCAD, which is commonly known as Loonie in the forex market, continues to rally as the market opened for the week. Loonie has been rallying since last week as the Feds look to tapper with the rate amid the US inflation crisis. A decline in the price of the Canadian dollar is also good news for the Loonie as the price will continue to rally. Loonie will likely rally to 1.30000 this week as the price is currently trading near the 1.29000 psychological level.
CADJPY crashed from 86.218 to 85.100 in less than 12 hours after the market opening, approaching its lowest price in August. The further decline will see the price of CADJPY breach below this support zone.
Other currencies are gaining strength against the Canadian Dollar as trading commences for the week.
As the market priced in ahead of the election, a sudden change in direction is not likely to occur as the market already made the move before the election. The Canadian dollar might continue to fall or go into a range from this point.
Leave a Reply