CAD steady despite election delivering another minority government - Scotiabank

The Canadian election results brought disappointment for pretty much everyone--the Liberals won, but are short of a majority, the Conservatives saw a jump in popular support but their leader failed to hold his own riding while both the NDP and Bloc lost heavily, Scotiabank's Chief FX Strategist Shaun Osborne notes.

USD downtrend remains well-established on the daily chart

"PM Carney will have to work with the minority parties--possibly the Bloc--to pass legislation. While the CAD slipped marginally in overnight trade but is trading little changed on the day now and USDCAD risk reversal pricing shows little change in skew through the 1- ,3- and 6-month tenors, suggesting markets are not overly concerned about another minority government at this point--despite the challenges ahead for Canada."

"Spot continues to consolidate on the short-term charts, with the broader USD decline finding some support against a broad range of congestion situated just below last week's 1.3781 low."

"The USD downtrend remains well-established on the daily chart which will help limit scope for USD rebounds in the near-term. Intraday resistance is 1.3880, with strong resistance likely nearer 1.40. Support is 1.3775/80 and (key) 1.3745."