The Fate of Loonie

Canadians will be deciding today who will be their next leader, with high probability of current ruling party (Progressive conservative party), losing majority of their seats. Mr Harper who is the incumbent prime minister has been accused of gross misappropriation of public funds for extravagant lifestyle of lawmakers at this period of falling oil price which has dragged the economy into recession. He was also criticized for not taking in Syrian refuges amongst other criticisms levied against him. Mr Harper has been in power for 3-term and he is seeking another re-election but Canadians think it is time for change. The Liberal party seems to be in favor of getting more seats as New Democratic Party might are not as stronger as they started.

The Canadian dollar over the past couple of months has suffered a big hit with falling oil price. This is because Canadian economy relies so much on oil revenue as it accrues for more than 45% of Canadian annual revenue. On the back of this, USDCAD price rallied to 1.3450 which is the highest price since 2009.

However, if we see another majority for conservative party, we might see little or no changes on Canadian dollar, but a Liberal majority would have more impact on the Canadian dollar. Canadian dollar might slump to the downside on the back of this because of Liberal policies such as, increase taxation; budget deficit is expected to increase and there is a possibility of job loss for the short term which they try to restructure the economy.

If we see a coalition between the Liberal and New Democratic Party, there might be almost the same effect has that of Liberal majority on Canadian dollar.