Canadians will head to the polls on 20 September after Prime Minister Justin Trudeau saw his request for snap elections granted on Sunday. As polls show a potential majority for the current PM, economists at ING expect the Canadian dollar to take advantage of it.
Inflation unlikely to be a game changer for the BoC
“Trudeau’sparty has seen a rebound in popularity during the pandemic and latest polls suggest it could reach the 170 parliament seats needed for a majority government at the September elections. This should be generally good news for CAD, especially if investors expect Trudeau to secure a majority in the parliament, although the magnitude of the FX impact should not be very significant.”
“Inflation data for July will be the key highlight in Canada this week. Barring a major deviation from June’s 3.1% headline figure (and especially if inflation remains above 3.0%), there should not be major repercussions on CAD, as the release should not materially change the Bank of Canada’s plans for unwinding stimulus.”
“We continue to expect, by year-end, to see the end of QE in Canada, and to see USD/CAD trade close to 1.20.”
