Intraday Market Thoughts

Canadian Dollar Cheers Conservative Majority

by Ashraf Laidi
May 3, 2011 4:42

Canadians rewarded the ruling Conservative party with a majority government in Federal elections Monday. Pollsters predicted the Conservatives would continue to rule with a minority as they have for the past five years but support for the centrist Liberal Party collapsed. The Canadian dollar rallied in response to the win by the right wing government, which has long championed foreign investment.

USD/CAD fell by 45 pips as the results rolled in. Some CAD crosses gained as much as 100 pips on the news. The Conservatives were vague on promises during the campaign and instead focused on their role as a strong economic steward during the recession. They promised to trim $11 billion in spending during the campaign but would not say how. They also promised to balance the budget by the end of their term in 2015.

The Canadian dollar could be volatile in the coming days as Prime Minister Harper offers further clarity on how he will govern the country. Its unlikely that the knee jerk CAD-positive reaction will be sustained.

By AB - Staff


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