Canadian election preview: AUD/CAD in focus as Liberals cling to a tiny lead
Matt Weller, CFA, CMT September 14, 2021 11:07 AM
The most likely scenario is a minority government, meaning that the winning party will have to collaborate with other parties to reach a consensus about new policies...
After staying cooped up inside for most of the past 18 months, Canadian citizens finally have an excuse to venture outside their homes: The country holds a snap election next week, and based on the polls, it’s poised to be a tight one, with potentially significant market implications.
When is the Canadian election 2021?
The 2021 Canadian federal election will take place on Monday September 20, 2021, and if it’s anything like past elections, the results could well be known by that evening.
Who are the candidates in the Canadian election 2021?
While there were six “parties” (including Independents) represented in parliament when it was dissolved on August 15, there are three primary candidates/parties to watch:
- Liberal party: Incumbent Prime Minister Justin Trudueau
- Conservative Party: Erin O’Toole
- New Democrat party: Jagmeet Singh
What are the Canadian election 2021 polls showing?
The most recent polls show a minor lead for the Liberals, with CBC News showing an average support of 31.9% in recent polls. Just behind, the Conservatives have been averaging 31.3 support in recent polls while the New Democrats have been polling at 19.4%.
Source: CBC News
Notably, the Liberals do have a seat advantage in parliament, which makes them the party most likely to emerge with the most seats by a bigger margin than the polls would suggest; CBC News estimates a 71% chance of the Liberals emerging with the most seats, compared to just 28% for the Conservatives as the chart below shows:
Source: CBC News
How will the 2021 Canadian election impact markets?
The most likely scenario is a minority government, meaning that the winning party will have to collaborate with other parties to reach a consensus about new policies, and this likelihood may well prevent any dramatic market moves.
My colleague Joe Perry has already broken down the key technical levels and factors to watch for the USD/CAD currency pair in his Currency Pair of the Week article, so we’ll focus in on AUD/CAD, our second most-traded loonie cross.
Since peaking near parity (1.00) in late February, AUD/CAD has been trending lower for over six months to hit a low around 0.9100 so far. That said, the pair has seen an impressive rally over the last three weeks to test previous resistance around the 0.9380 level. Despite the impressive short-term rally, the longer-term bias on AUD/CAD remains to the downside as long as rates remain below the previous highs and 200-day EMA in the 0.9380-0.9400 zone:
Source: StoneX, TradingView
Depending on the outcome of the election, rates could easily retrace the recent rally and fall back below 0.9200 to resume the longer-term downtrend later this month.
How to trade with FOREX.com
Follow these easy steps to start trading with FOREX.com today:
- Open a Forex.com account, or log-in if you’re already a customer.
- Search for the pair you want to trade in our award-winning platform.
- Choose your position and size, and your stop and limit levels.
- Place the trade.
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.