September 20, 2021

Will the Loonie Dollar Be Affected by the Canadian Election?

 Canadian elections will take place today after it was abruptly announced by Prime Minister Justin Trudeau last month who wanted to find a new mandate to tackle the Covid-19 crisis.

Trudeau has faced criticism for holding elections two years earlier than they should have been, but he defended the decision by saying he wanted Canadians to have a voice in how the country recovers from the epidemic.

Following this announcement as well, it caused foreign investors to worry that the election would cause a stalemate in Canada’s response to tackling the coronavirus and in turn further slow the economic recovery.

On Thursday, Fitch Ratings lowered its forecast for Canadian economic growth for 2021 to 5% from 6.6%.

The Canadian dollar continued to show a fall ahead of the election, with price movements getting closer to a nearly four -week low against the strong U.S. dollar.

Throughout the election campaign, the Liberal party led by Trudeau and the Conservative party led by Erin O’Toole have exhibited strong competition.

However, the Liberal party is expected to win more parliamentary seats than the Conservatives. If that happens, the loonie may be less responsive and continue to trade lower.