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Canadian Prime Minister Justin Trudeau is expected to announce his resignation live on Monday. As this news breaks, the Canadian loonie (CAD=X) is trending higher.
TD Securities Global Head of FX and EM Strategy Mark McCormick joins Catalysts to analyze the currency's movement. McCormick believes the shift in the Canadian loonie is more closely tied to moves in the US dollar (DX=F, DX-Y.NYB) than the prime minister's expected resignation announcement.
"I think what we're seeing here is market positioning and valuations, which are very important short-term drivers of the currencies... those tell us based on the indicators that we track that the dollar's just stretched right now," he tells Yahoo Finance.
He elaborates on the broader global context: "The market's really long [on] the US dollar. It's looking for excuses to pullback, maybe lighten up the trade a little bit. But there's nothing here that I think is idiosyncratic to the Canadian dollar or Canada. It just fits into a block of broader... geomacro theme which is incumbents are losing and... essentially people are looking for a new change in direction in all forms of government. Canada, Germany, France, it's very consistent across the board."
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Despite these movements, McCormick suggests this presents an opportunity to sell the Canadian dollar and other currencies while buying the US dollar.
To watch more expert insights and analysis on the latest market action, check out more Catalysts here.
This post was written by Angel Smith