USD/CAD PRICE OUTLOOK: US DOLLAR EYES SUPPORT AS ELECTION UNCERTAINTY LINGERS
US Dollar weakness was a glaring theme throughout Tuesday’s trading session as markets positioned for a blue-wave on election night. USD price action gravitated lower seeing that a Democratic sweep would likely lead to the passage of a massive fiscal stimulus package in the near future, and a Biden presidency would likely be relatively friendlier on trade policy with Canada.
In contrast to a Biden shoe-in hinted at by political polls, however, reality has been quite the nail-bitter. Betting odds for a Trump victory ping-ponged throughout election night and into Wednesday morning, which corresponded with aggressive repricing of US Dollar weakness. For example, USD/CAD price action was trading around the 1.3100-handle until news crossed the wires that Trump would win Ohio and Florida, two states historically needed for a GOP presidency, which sparked a 200-pip surge by the US Dollar against the Loonie.
USD/CAD PRICE CHART: DAILY TIME FRAME (18 JUN TO 04 NOV 2020)
As Wednesday’s trading session progressed, betting odds flipped back in favor of a Biden victory as he turned Arizona while Trump’s lead in Michigan and Wisconsin thinned. This send USD/CAD snapping back to intraday lows. Current numbers have Joe Biden with 238 electoral college votes and Donald Trump with 213. That said, it looks like the election will come down to the results of Michigan and Pennsylvania.
USD/CAD price action could remain under pressure as mail-in ballots
