Home Forex Strategy FOREX-Dollar recovers; loonie rises ahead of election results – Yahoo Finance

FOREX-Dollar recovers; loonie rises ahead of election results – Yahoo Finance

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By Kate Duguid

NEW YORK, Oct 21 (Reuters) – The U.S. dollar recovered earlier losses on Monday afternoon as Brexit negotiations were once again thrown into disarray, and the Canadian dollar strengthened in the hours before results of the election for prime minister, which is expected to be close.

Earlier on Monday, the U.S. dollar was crawling toward its worst month since January 2018 as the pound and euro were pushed higher by intermittent waves of Brexit optimism.

But the dollar turned around in North American trade after House of Commons speaker John Bercow refused to allow a vote on Prime Minister Boris Johnson’s Brexit deal, adding to the obstacles to its ratification in time for an Oct. 31 deadline.

Against the dollar, sterling was last down 0.02% to $1.297 having earlier broken above $1.30 for the first time in 5-1/2 months. The euro was 0.21% lower against the dollar , having also been lifted by Brexit optimism this month by 2.26%.

“Brexit has been doing a lot of the hard work in terms of moving things around,” said Daniel Katzive, head of foreign exchange strategy for North America at BNP Paribas in New York.

The dollar was last up 0.05%, but remains down 2.05% this month. It hovered at $1.115 per euro but managed to claw up to 108.58 against the safe-haven Japanese yen. The yen has been weak too, having hit a 2-1/2-month low last week.

The Canadian dollar was last 0.31% stronger against the U.S. dollar as Canadians voted on Monday to determine whether Prime Minister Justin Trudeau, who swept into office four years ago as a charismatic figure promising “sunny ways,” will remain in power after two major scandals. His Liberals and the main opposition Conservatives led by Andrew Scheer are in a neck-and-neck race, according to opinion polls.

“In Canada, traders are awaiting news on election results this evening and effectively keeping the powder dry given that the race is so close at this moment,” said Karl Schamotta, chief market strategist at Cambridge Global Payments.

“The consensus is that if we were looking at a Liberal government or a minority Liberal government, with the likelihood of an alliance with the NDP, that would pull the Canadian dollar back slightly, though we’re not looking at a massive move – something like 50 to 100 basis points,” he said, referring to the smaller left-leaning New Democratic Party.

“Alternatively, a Tory victory would push the Canadian dollar up slightly, again by 50 to 100 basis points,” he said, referring to the Conservatives. (Reporting by Kate Duguid; Additional reporting by Marc Jones in London; Editing by Lisa Shumaker and Sonya Hepinstall)

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