TORONTO – The Canadian dollar strengthened against its US counterpart in Asian trade on Tuesday as oil prices rose and a projected election victory for Prime Minister Justin Trudeau’s Liberal Party reassured investors that economic support would continue.
Trudeau’s liberals were well on their way to winning the Canadian election, but they looked set to miss out on their goal of a majority victory.
Carl Schmotta, Cambridge’s chief market strategist, said, “This looks like a decisive victory for the Liberals who essentially uphold the status quo and ensure that the fiscal spending plans that have supported the economy for the past year and a half. likely to continue.” global payment.
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Foreign investors worried that the election could result in a deadlock that would hamper Ottawa’s response to the COVID-19 pandemic and further slow the economic recovery from the crisis.
“The more supportive fiscal policy is, the more likely the bank (of Canada) is able to go beyond rate hikes over the next year and a half,” Shamotta said.
The Liberals have promised a substantial amount of $78 billion in new spending over five years.
After trading in a range of 1.2779 to 1.2830, the Canadian dollar was trading 0.3% higher at 1.2785 on the greenback, or 78.22 US cents.
On Monday, the loonie hit its weakest intraday level in over a month at 1.2895, as trouble at asset group China Evergrande rocked global financial markets.
Looney gains on Tuesday came as markets showed signs of calm and oil, one of Canada’s major exports, rebounded. US crude futures were up nearly 1% at 70.98 per barrel.
(Reporting by Fergal Smith; Editing by Edmund Kleman)