OPTIONS: Larger FX Option Pipeline

Latest opinion polling makes difficult reading for Canadian PM Justin Trudeau and his governing centre-left Liberal Party (LPC), with both the party and the PM trailing the main opposition centre-right Conservatives (CPC) by a notable margin. The next election is not due until Oct 2025 at the latest, meaning that there is time for the LPC to stage a rally in support. However, the polling indicates that this might only prove possible with a combination of the following events: a decline in mortgage rates, an improvement in the economy, Trudeau stepping down as leader, the increased likelihood of a CPC gov't under Pierre Poilievre.

• Polling from Abacus Data, 27 Oct-1 Nov, 2,200 respondents.
• GE polling: CPC 39% (-1), LPC 26% (=), New Democratic Party 18% (-1), Bloc Quebecois 7% (=), Greens 5% (=), People's Party 4% (+1) chgs w/15 Oct
• Leader Net Approvals: Poilievre: +8%, Singh: +5%, Trudeau: -24%
• "Would you be more or less likely to vote Liberal if Trudeau was no longer leader?" No Impact: 52%, More likely: 34%, Less Likely: 14%
• "Who do you think will win the next federal election?" Poilievre/Conservatives: 43%, Trudeau/Liberals: 20%, Singh/NDP: 10%, Unsure: 27%
• Former Chief of Staff to ex-PM Jean Chretien, LPC Senator Percy Downe, penned a well-circulated article calling for Trudeau's resignation as a 'prudent course of action.' While Downe's views are not necessarily widespread in the LPC, such articles could raise question marks over Trudeau's longevity as PM.

• USDCAD at 1.3665 is seeing a slight unwinding of the earlier rise to 1.3684, itself having come after lifting off a low of 1.3629 which cleared support at the 50-day EMA of 1.3639. A resumed move lower could a trendline support at 1.3570 drawn from the Jul 14 low.
• Looking more broadly, the typical drivers for recent moves in USDCAD don’t warrant the intraday lift today. The S&P e-mini maintains particularly narrow ranges to consolidate Friday’s post-payrolls gain and WTI is currently +1.5% to retrace some of Friday’s slide.
• One factor potentially carrying more prominence is a further drift wider in CAN-US yield differentials, at -49bps for the 2Y and -85bp for the 10Y.
• Released late Friday, CFTC data showed a fourth consecutive month for CAD net shorts, at least in futures space, at -25%. It compares with -38% for AUD and -22% for NZD.

Source: Bloomberg

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