We are pleased to bring you the latest edition of the series produced by our colleagues in RBC Capital Markets, hosted by George Davis, CMT, the award winning Chief Technical Analyst for Fixed Income and Currency Strategy. In this installment George discusses the upcoming US election and the potential impact it may have on currency markets.
In looking at current drivers for USDCAD, broad-based USD direction remains the key determinant for the Canadian Dollar. Election odds currently predict a very close race with Trump slightly ahead with expectations that Trump may dispute a losing result, which presents the potential for uncertainty in FX markets. A Trump victory would likely be bullish for the USD by way of new trade tariffs. A Harris win would be considered a more neutral outcome with regards to policy direction, tariffs, etc. Historically, the USD tends to appreciate into an election window and beyond, plateauing during the first half of the next year while declining during the second half.
For the month ahead, George expects a trading range of 1.3400 to 1.3900, with the election window and/or a Trump victory possibly providing some advantages for USD sellers. A move towards the 1.3450/1.3400 would present an opportunity for USD buyers.