Canadian dollar holds steady after election

The Canadian Dollar remained largely stable on Monday following the results of the country’s general election, where the ruling Liberal Party, led by Prime Minister Mark Carney, was projected to retain power but fell short of securing a parliamentary majority. Early market reactions saw brief volatility in the Loonie, but any initial bullish momentum quickly faded amid the realization that the Liberals, despite leading with 156 districts, still fall short of the 172 seats needed for outright control of the 343-seat House of Commons.

Carney’s leadership — bolstered by his prior roles at the helm of the Bank of Canada and Bank of England — is broadly seen as reassuring for investors. His economic credibility offers a degree of policy stability in a globally uncertain environment. However, his tougher stance toward the United States on tariffs raises the potential for a more contentious trade relationship in the coming months, with the likelihood of renewed negotiation battles looming on the horizon.

Trade policy remains fluid as White House and BRICS recalibrate

Broader market conditions remained subdued during Monday’s session, exacerbated by the closure of Japanese markets for the Showa holiday and a general reluctance among traders to take new positions ahead of a critical week for economic data.

Trade tensions continue to dominate the background narrative. While markets appear increasingly desensitized to tariff headlines, developments from Washington suggest the Trump administration is seeking to ease domestic fallout from its protectionist policies. Reports indicate that the White House plans to soften the blow of auto tariffs by lowering duties on imported parts and preventing overlapping charges on finished vehicles — particularly steel and aluminum — with tariff refunds for past payments expected. A formal announcement is anticipated on Tuesday.

Meanwhile, on the global stage, BRICS foreign ministers met to coordinate their response to the latest wave of US tariffs. Although China — hardest hit by a staggering 145% average tariff on exports to the US — advocated for a more aggressive stance, the final communique is expected to deliver a firm but restrained message. Markets are keenly watching to see whether rhetoric escalates or remains contained.

Markets turn cautious ahead of GDP releases

In the immediate term, today's German and US consumer sentiment figures are on deck but are unlikely to generate significant market moves. The true focus lies on tomorrow’s heavy releases: Eurozone and US GDP reports for the first quarter.

With recession fears back in the conversation — fueled by trade disruptions and tighter financial conditions — these numbers could sharply reshape expectations for central bank action from both the Federal Reserve and the European Central Bank. Particularly, any downside surprise could reignite speculation of rate cuts or additional stimulus as policymakers navigate increasingly fragile growth outlooks.