After Trump’s Triumph, the Canadian dollar tanked, but then recovered. What’s next?
Here is their view, courtesy of eFXnews:
In a major turn of events, Donald Trump has won the US presidential election. The impact of his Presidency on the Canadian economy will depend on the policies that he puts in place.
The changes in policies under a Trump Presidency are likely to affect Canada through:
1)Â a reduction in trade due to more protectionist measures, including a possible withdrawal from NAFTA,
2)Â a more pro-fossil fuel focus that could reduce the need for Canadian oil,
3)Â a likely increase in military spending as a result of a more isolationist US foreign policy,
4) increased spending on infrastructure, which could be positive but will depend on trade policies and the ‘Buy America’ clause in public contracts.
The overall impact is likely to be negative but depends on the policies that will be put in place.
The result of the US election doesn’t change our view on the Bank of Canada which remains dependent on incoming data. Nevertheless, given the possible impact on the economy from trade policies and the increased uncertainty, the likelihood that the BoC will need to provide further monetary easing in the medium term has increased.
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