The financial institution Julius Baer considers that the resignation of Justin Trudeau as Prime Minister of Canada offers an opportunity for the Canadian dollar to appreciate, as it opens a door so that with another minister, the policies of that country are closer to those of the President-elect of the United States, Donald Trump, especially on tariff issues.
According to the Swiss bank, voters perceive that Trudeau cannot resist pressure from Trump, who has threatened Canada with a 25% increase in tariffs, and a conservative prime minister like Pierre Poilievre, more aligned with the policies of the Republican, could reduce this tariff threat and improve the negative sentiment that has driven the Canadian dollar to a parity of 1.44 with the US dollar.
“We view these threats and Trump’s recent comments about forcing Canada to integrate more with the United States as primarily political tactics to pressure other areas of bilateral policy,” he said.
“After all, imposing tariffs on Canada would increase prices for American consumers and producers, due to the close economic ties between both countries. For these reasons, we foresee a decrease in tensions and an improvement in sentiment towards the Canadian dollar, which could allow it to bottom out around 2025,” noted Julius Baer.
On Monday Justin Trudeau announced his resignation as Prime Minister of Canada and as leader of the Liberal Party and the suspension of Parliament (prorogation) has halted all legislative activities until March 24. The Liberal Party’s national board will meet on Wednesday to discuss how to select a new leader more quickly than the traditional process, which usually takes several months.
In the analysis document “Canadian Dollar: Does Political Change Offer an Opportunity?”, the Swiss bank noted that possible candidates also include Chrystia Freeland, former Minister of Finance, and Mark Carney, former Governor of the Bank of Canada and the Bank of Canada. England, and Trudeau will close his mandate of almost a decade, which began with the Liberal victory in 2015.
He recalled that the growing discontent towards Trudeau began after the call for early elections in 2021, a poorly calculated move that cost the Liberal Party the absolute majority. Since then, he has governed with a minority government that has relied on the support of the New Democratic Party.
Although the next federal election must be held before October 20, 2025, it is likely to be called early this year or forced by a vote of no confidence. New Democratic Party leader Jagmeet Singh recently called for voting against the Liberals.
The Swiss bank assured that the leader of the Conservative Party, Pierre Poilievre, is the favorite to become the next Prime Minister, since since the election of Donald Trump as president of the United States, polls reflect a constant decline of the liberals, even behind of the New Democratic Party in some polls, while the conservatives widen their lead towards a possible landslide victory.
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