The Canadian dollar rose with the beginning of today's trading amid an expected victory for the Liberal Party led by Justin Trudeau and on his way to win a third term in a row, and it is now clear that the minority government will continue with very close results and counting more than 98% of the votes.
The ruling Liberal Party won 158 seats in the House of Commons, which consists of 338 seats, and obtaining a majority requires 170 seats, the Conservatives won 119 seats, the New Democratic Party won 25 seats, the Quebec bloc got 34 seats, and the Green Party got two seats.
Trudeau had called a snap election in mid-August in an effort to regain the majority he lost in the 2019 elections. He has been in power since 2015. A minority government would mean that liberals would rely on opposition parties such as the New Democratic Party to pass legislation.
The Canadian dollar boosted its gains with the expected victory of the ruling party, which reassured the markets that the massive support provided during the pandemic period will continue. It is likely that the US dollar against the Canadian dollar will continue to decline to retest a strong support area around the psychological level of 1.27, and trading below that level will be considered a prelude to more strength for the Canadian dollar against its US counterpart, and we may see the 1.26 levels.
However, the markets will be awaiting the results of the Fed meeting tomorrow evening, which may determine the direction of the US dollar in general against all its competitors, so the 1.27 levels may be just a support to push prices to rise again towards the 1.28/1.2850 levels.