Conservatives and Liberals neck-and-neck
Canadians vote Monday in what is sure to be an extremely tight race. Polls show Trudeau's governing Liberals at 31.5% compared to opposition Conservatives at 31.6%. A smattering of other parties hold the balance of the votes.
Canada has a parliamentary first-past-the-post system and that means vote concentration can skew the results. That's most-likely what will happen and it's what makes Trudeau the favourite in betting markets.
What's most likely to happen is that neither the Conservatives nor Liberals have the seats to form a majority. In that case, Trudeau is still most likely to become the Prime Minister because all the other parties are to his left and unlikely to work with the Conservatives.
The Globe and Mail has a good rundown on what some other currency strategists are saying about the race. The mainstream is that the election won't matter much but I'm not so sure. I think it's the same playbook as virtually every election -- money comes back no matter that result.
The main fear is a Liberal government held up by a formal coalition with the NDP but if there's a loonie slump on that, I think the trade is to buy it. I think what's most likely is that either the Liberals or Conservatives govern without a formal majority and support each other (rather than triggering an election) for at least a couple years as come economic projects move forward. That will mean some growth-positive policies.
The break below the September low is sending a strong signal here, no?
