Canadian Dollar Edges Higher as Carney’s Liberals Win Election

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(Bloomberg) — Canada’s dollar rose against the greenback as Mark Carney was projected to win in the election, keeping the former central banker in the Prime Minister role and his Liberal Party in power. 

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The loonie gained 0.1% to 1.3815 per dollar as of 10:16 a.m. in Hong Kong. Futures for the US-listed shares of S&P/TSX 60 Index members were little changed.

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Carney, who touted himself as an experienced crisis manager during the five-week campaign, is tasked with helping the Canadian economy pivot to a new era that will likely be less dependent on the US, its biggest trading partner. He took over the job from Justin Trudeau in March.

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Much of the country has been swept up in anti-American sentiment since President Donald Trump aimed harsh tariffs at Canada and threatened its sovereignty, suggesting it should be the 51st US state. Canada has retaliated against the levies with tariffs on more than $60 billion of US imports.

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The loonie touched its weakest level in over two decades in early February when Trump first announced tariffs on imports from Canada and Mexico. It has recovered since then as some trade restrictions were softened and negotiations were mostly shelved until after the election. 

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Canada’s currency has climbed about 4% against the greenback so far this year as investors fled from US assets, but the gains are smaller than many of its peers in the Group-of-10 have made.   

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Analysts aren’t betting on the loonie to catch up. Citigroup strategists last week said the loonie could fall as low as 1.45 per dollar if trade tensions with the US re-escalated.

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Still, hedge funds have turned the least bearish on the loonie in a year, according to data from the Commodity Futures Trading Commission for the week ending April 22.

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Stocks Take Off

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Canada’s stocks benchmark S&P/TSX Composite Index has outperformed the S&P 500 Index for three straight quarters leading up to Monday’s election. Toronto’s gauge has a high concentration of gold mining stocks, and their strong gains have helped the index shine through tariff- and trade-induced market volatility.

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The index has pared heavy losses from early April, when it entered a correction after Trump unleashed so-called reciprocal tariffs on global trading partners, excluding Canada. Declines on the S&P/TSX were less severe than the S&P 500’s, with the US benchmark nearly falling into a bear market.

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Carney is inheriting an economy that could fall into a “significant recession” in the case of an all-out trade war, the Bank of Canada said earlier this month. It recently paused its interest-rate cutting campaign for the first time since June as it assesses the direction of US tariffs.

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Carney resigned all of his business positions, including as chair of Bloomberg Inc., earlier this year before seeking office.

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—With assistance from Ruth Carson and Tian Chen.

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