Come Nov. 8 the United States will vote in either President Donald Trump or President Hillary Clinton, and Canada’s currency could take a wild ride, or coast comfortably, in reaction to the news.
The election results could prompt an immediate change in the greenback’s value, and generally when the USD slumps, the loonie rises, and vice versa.
IN DEPTH: U.S. presidential election 2016
Long-term, new measures under new leadership could really change the trajectory of Canada’s currency.
The U.S. is Canada’s biggest trade partner, and the two economies are undoubtedly tied. Protectionist rhetoric has at times dominated Trump’s campaign, and Clinton too has hinted trade deals could change under her leadership.
Here’s a look at what we might expect after the votes are counted.
President Hillary Clinton
A Clinton victory is not likely to rock the boat, at least for a while, said Craig Alexander, senior vice-president and chief economist of The Conference Board of Canada.
“With respect to the Canadian dollar, a victory for Hillary Clinton would be a victory in the status-quo camp,” said Alexander.
READ MORE: Donald Trump or Hillary Clinton: which president would be better for Canada’s economy?
While her policies are not identical to Obama’s, financial markets would largely interpret a Clinton win as a continuity in policy.
The U.S. dollar could strengthen as a Clinton win would signal greenback stability, said Colin Cieszynski, chief market strategist at CMC Markets Canada, in an email exchange with Global News.
“Currently with Hillary Clinton leading, USD is going up against pretty much everything on anticipation of a Fed rate hike in December and capital looking for a stable haven to flee uncertainty in Europe.
“If Clinton wins there may be a small selloff in USD on profit-taking on the news, but that’s it.”
READ MORE: Trump vs. Clinton debate: Fact check on Hillary Clinton calling TPP ‘the gold standard’
But a change in trade policies down the road could alter the way we do business. Clinton has flip-flopped and now opposes the Trans-Pacific Partnership (TPP) deal, but remains a fan of the North American Free Trade Agreement (NAFTA).
“Hillary is her own person, she’ll have her own policies, but I don’t think financial markets will have any real concerns about her victory,” said Alexander.
President Donald Trump
Should Trump get the win, things could get interesting.
“A Donald Trump victory…would be a big surprise to complacent markets and could really upset the apple cart,” said Cieszynski. “A Trump win could send U.S. stocks and USD down sharply a la Brexit in June. This would boost the loonie relative to the greenback.”
READ MORE: Trump, Clinton’s tough talk on trade more bark than bite: report
Alexander agrees: Trump’s bombastic nature leaves you wondering what he’ll follow through on. Among his promises to bring back jobs to the United States, Trump has said he would withdraw from TPP and make major changes to NAFTA.
“A Trump victory would lead to uncertainty in markets as to what policies might in fact be implemented” said Alexander.
“So, I think that the knee-jerk reaction would be negative for the U.S. dollar, potentially positive for the Canadian dollar in the short term. And then there’s the questions really of, what actually gets implemented.”
Cieszynski expects a Trump win would hit Mexico’s currency harder than Canada’s.
“Trump has been far more antagonistic to Mexico than Canada to date.”
Markets keeping watch
The dollar is already reacting to the presidential race.
“Financial markets pay very close attention to polls,” said Alexander. “If the polls are showing Trump behind, then in a sense the impact on the currency is already being built into financial market expectations.”
READ MORE: Donald Trump trails Hillary Clinton by 8 points after tape scandal: Reuters/Ipsos poll
Polls this week show a bump in support for Clinton as Trump deals with the fallout from a leaked 2005 video in which he boasts about groping women. Multiple women have since come forward with allegations against Trump of unwanted sexual contact.
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