Canadian dollar rises as Trudeau victory paves way for economic support

By Fergal Smith

TORONTO, Sept. 20 (Reuters) – The Canadian dollar strengthened against its US counterpart in Asian trading on Tuesday as oil prices rose and an election victory predicted for Prime Minister Justin Trudeau’s Liberal party has reassured investors that economic support would continue.

Trudeau’s Liberals were on track to win the Canadian election, CBC and CTV television networks forecast as the results rolled in, but they looked well below their goal of majority victory.

“It looks like a decisive victory for the Liberals that essentially preserves the status quo and ensures that the budget spending plans that have supported the economy for a year and a half are likely to continue,” said Karl Schamotta, chief markets strategist. in Cambridge. Global payments.

Foreign investors feared the election could lead to a deadlock that would hamper Ottawa’s response to the COVID-19 pandemic and further slow economic recovery from the crisis.

“The more favorable the fiscal policy, the more likely the Bank (of Canada) is to move from gradual cut to rate hikes over the next year and a half,” Schamotta said.

The Liberals have pledged a substantial C $ 78 billion in new spending over five years.

The Canadian dollar was trading up 0.3% to 1.2785 against the greenback, or 78.22 US cents, after trading in a range of 1.2779 to 1.2830.

On Monday, the loonie hit its lowest intraday level in a month at 1.2895 as problems at real estate group China Evergrande rocked global financial markets.

The loonie’s gains on Tuesday came as markets showed signs of easing and oil, one of Canada’s top exports, rebounded. US crude oil futures rose nearly 1% to 70.98 a barrel. (Reporting by Fergal Smith; Editing by Edmund Klamann)

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