LOONIE STRENGTHENS AS CANADIANS HEAD TO THE POLLS

By Fergal Smith

TORONTO (Reuters) - The Canadian dollar edged higher against its U.S. counterpart on Monday as the greenback posted broad-based declines and Canadians voted in a general election that has been dominated by concerns about U.S. trade tariffs.

The loonie was trading 0.2% higher at 1.3830 per U.S. dollar, or 72.31 U.S. cents, after moving in a range of 1.3817 to 1.3892.

The Liberal Party, led by Prime Minister Mark Carney, who has emphasized his experience handling economic issues, is expected to win the most seats, according to the latest polls.

However, the race has tightened and a majority government is far from assured.

A minority government outcome could weigh on the Canadian dollar, while the currency would likely rally on a surprise victory for the main opposition Conservative Party, led by Pierre Poilievre, analysts say.

"Foreign exchange markets look remarkably unworried," Karl Schamotta, chief market strategist at Corpay, said in a note, pointing to the recent decline in USD-CAD risk reversals, or the cost of insuring against a big downside move in the Canadian dollar.

The risk of a minority government may be understated, Schamotta said, adding that such an outcome could force the victor to seek an alliance with the separatist Bloc Quebecois, complicating policy setting.

The price of oil, one of Canada's major exports, settled 1.5% lower at $62.05 a barrel as the global trade war stoked demand fears, while the U.S. dollar lost ground against a basket of major currencies.

Canadian wholesale trade most likely fell 0.3% in March from February, with declines in five of the seven subsectors, Statistics Canada said in a flash estimate.

Canadian government bond yields eased across the curve, tracking moves in U.S. Treasuries. The 10-year was down nearly one basis point at 3.166%.

(Reporting by Fergal Smith, Editing by William Maclean and Marguerita Choy)

2025-04-28T21:06:04Z