CAD: Trudeau reportedly about to resign - ING

A media report is suggesting the Canada's prime minister Justin Trudeau will resign as leader of the Liberal Party this week. That would not necessarily lead to early elections, as a leadership contest would take place to select a new prime minister. Anyway, elections will be held in October at the latest, and the opposition Conservative Party has a vast lead in the polls, ING's FX analyst Francesco Pesole notes.

Upside risks for USD/CAD can extend to 1.50

"The Canadian dollar (CAD) reacted positively to the report and USD/CAD has reversed Friday's rally. The move was quite small compared to the magnitude of the Loonie's depreciation in December, signaling only very cautious optimism that this development can lower the risk of Canada being hit by US tariffs."

"We discuss the outlook for CAD in light of Trump's protectionism threat in this note, and our bottom line remains that upside risks for USD/CAD could extend to 1.50 in the event of a fully-fledged North American trade war. In the coming days, expect CAD to be very sensitive to any political news and the potential implications for US-Canada trade relationships."

"Canada's jobs figures are also released on Friday, but that is now a secondary input for the Bank of Canada compared to the risk of US tariffs."