Canadian Prime Minister Justin Trudeau announced his resignation on Monday, sparking a rally in the Canadian dollar as investors welcomed the political clarity and the prospect of a more market-friendly government. The loonie climbed 0.7%, trading at 1.4350 to the U.S. dollar, or 69.69 U.S. cents, reaching its strongest intraday level since December 17 at 1.4280.
Trudeau confirmed he would step down as the leader of the Liberal Party but will remain in office until a successor is chosen. His announcement follows growing calls for his resignation amid criticism over economic stagnation during his tenure.
Nick Rees, Senior FX Market Analyst at Monex Europe Ltd., remarked, “News that Justin Trudeau has announced his resignation is helping to underpin loonie gains. Markets had grown disillusioned with his administration,” reported by Reuters.
Investor sentiment also improved after reports suggested that U.S. President-elect Donald Trump is considering targeted tariffs on critical imports rather than broader levies. This alleviates fears for Canada, which faced potential tariffs of up to 25% on all imports.
Adding to the optimism, oil prices, one of Canada’s key exports, surged to their highest levels since mid-October, supported by colder weather driving demand. U.S. crude oil futures rose 1.1% to $74.74 per barrel, further bolstering the loonie.
Meanwhile, Canadian bond yields mirrored U.S. Treasury movements, with the 10-year yield increasing by 1.8 basis points to 3.250%.
Trudeau’s resignation signals a turning point for Canada’s political and economic outlook, with analysts anticipating a smoother path for governance and trade negotiations. With the loonie strengthening and oil prices climbing, Canada’s economic prospects look poised for a positive shift as 2025 unfolds.
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