USD Stability Ahead? What Trump’s Return Means for CAD Exchange Rates

Today's expected range for the Canadian Dollar against the major currencies:

US Dollar        1.3850-1.4050

Euro                 1.4820-1.5030

Sterling            1.7810-1.8020

WTI Oil (opening level) $70.85

The CAD is opening at 1.3897 ( 0.7196)

In March of 2020 the Canadian dollar went as high as 1.45 due to the COVID 19 shut down. The world flocked in mass to the USD because of the fear of complete collapse of the financial system. It eventually - 3 months later- came back down to the same levels we are at right now. When the Biden Harris team got elected 4 years ago the CAD price was 1.314 and two months later we were at 1.275. 6 months later we were at 1.22

During the years 2017 to 2020 the USD traded between 1.31 and 1.34 basically. There was stability in those ranges when there was no global crisis.

So now that we have the Trump team back in - after a very solid election result - the expectations should be for resumed stability going forward in regards to the currency markets. During the Reagan presidency the CAD traded between 1.14 and 1.18 I was told by an old currency trader that the reason for that price range was that Reagan thought that was appropriate level for the CAD. I suspect that Trump will want the CAD trading in a range of 1.34 again, so that Canada does not have currency advantage over the USA when it comes to trade. A weak CAD helps with selling our resources around the world and Trump doesn't like taking away opportunities for the USA based companies to be successful.

So look for the world to express their belief that the USA is strong again - as we can see in the USD index move up over 1% since the election results were confirmed. But tomorrow there will be a interest rate announcement that will likely see the rate come down in the USA. That will likely weaken the USD - just like it did 2 months ago when they lowered the rate by 50 bps. In my view this is likely the worst the CAD gets and it is probably a selling opportunity.