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The CAD/USD is expected to face limited fluctuations due to Mark Carney’s rise to Prime Minister and the possibility of an upcoming election, with U.S.-Canada trade disputes and wider USD/CAD trends remaining the dominant drivers of the currency’s path, according to BofA Securities.
“Although an election during ongoing tariff talks might seem to create additional uncertainty, historical data shows that USD/CAD has typically remained stable leading into Canadian federal elections,” Howard Du, a strategist at BofA Securities, noted in a recent report analyzing the Canadian dollar’s prospects under potential new leadership.
On March 9, the Liberal Party of Canada selected Carney—former governor of the Bank of Canada and the Bank of England—as its new leader, with a commanding 85.9% of the vote.
BofA Securities emphasizes that global economic conditions and the ongoing U.S.-Canada tariff negotiations will likely have a more substantial impact on the Canadian dollar than the election results. The strategist predicts that the USD/CAD exchange rate will decline to 1.40 by the end of the year, driven by “a generally weaker U.S. dollar and a reduction in the uniquely negative tariff pressures on the CAD.”
Du highlights that the release of the America First Trade Policy review on April 2 could be a key event in shaping the next significant trend for USD/CAD. He advises investors to prioritize trade-related developments over political events when planning their Canadian dollar strategies in the months ahead.