Election Day, Eh?
Today’s Spotlight Market
Today, October 19, is Election Day in Canada. Although US readers may be surprised, this is the longest election campaign in modern Canadian history, lasting 78 days. Although the polls indicate a close race, the Canadian Dollar has rallied over recent days.
Fundamentals
This election has been a close one in the polls, with all 3 major Canadian political parties jostling for the lead. Heading into Election Day, the Liberal Party led by Justin Trudeau has a slight lead. It remains uncertain if any party will capture a majority of the 308 seats in the Canadian House of Commons. Coalition governments, although common in parliamentary systems, are rare in Canada with the last one occurring during World War I. The Canadian economy is still struggling after entering recession this year with the first two quarters of the year showing negative GDP growth. The most recent jobs report showed a rise in unemployment to 7.1%. The recent rise in Crude Oil prices could help spur growth in the Canadian economy if the rise is sustained.
Technical Notes – View Today’s Chart
Turning to the 3 month continuation chart, we see a very sharp bullish reversal. The Canadian Dollar had been making a series of lower highs and lower lows until recently bottoming out at .7446. The Canadian Dollar broke through the 20 day Simple Moving Average (SMA), which was a resistance level and then quickly also broke through the 50 day SMA. The 20 day SMA crossed above 50 day SMA for yet another bullish sign. 14 day Relative Strength is a very bullish overbought level at 79.76.
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