Analyst reaction to Liberals victory in Canada election

Canadian Prime Minister Mark Carney’s Liberals retained power in the country’s election on Monday, but CTV News predicted they would fall short of the majority government he had wanted to help him negotiate tariffs with U.S. President Donald Trump.

Moves in the Canadian dollar CAD= were muted, with trading in currency markets in Asian hours thinned owing to a holiday in Japan. The loonie was last 0.2% weaker at C$1.3856, reversing its slight gain from earlier in the session.

Here are some comments:

CHARU CHANANA, CHIEF INVESTMENT STRATEGIST, SAXO, SINGAPORE

“Canada’s likely Liberal minority outcome adds to uncertainty at a delicate time — with recession risks rising, tougher U.S. trade negotiations looming, and a growing need to diversify trade ties. Political fragmentation could limit the scale of fiscal stimulus for the Canadian economy, and investors may worry that Canada faces tough external negotiations without the domestic growth cushion it needs.”

MATT SIMPSON, SENIOR MARKET ANALYST, CITY INDEX, BRISBANE

“If there are two things investors don’t like, it’s uncertainty and minority governments. Investors now have both. With legislation likely harder to pass, it could mean trade negotiations are to be less smooth. And not that they were ever likely to be smooth to begin with.

“Investors remain in watch-and-see mode, ahead of key U.S. reports this week, though news of the minority government could help USD/CAD gain a bid or two over the near term.”