Canadian dollar seen strengthening as Trudeau faces growing calls to step down

Investing.com -- Canadian Prime Minister Justin Trudeau is facing growing calls from his party members to step down. This development comes ahead of a scheduled party meeting set to occur this week. Trudeau is expected to deliver a statement in Ottawa, the country's capital, at 10:45 a.m. local time on Monday.

Trudeau, who has been in power for nearly ten years, reportedly spent the holiday break contemplating his future. Some local reports suggest he may consider resigning before the party caucus gathers on Wednesday. However, Trudeau's spokespeople have not yet responded to requests for comments.

If Trudeau resigns, he would leave as one of Canada's most unpopular political figures, potentially leaving his party in a weakened state and the country facing an uncertain economic future. This uncertainty is compounded by incoming U.S. President Donald Trump's promise to impose a 25% tariff on Canadian imports.

The prime minister's political standing has been shaky, especially in the wake of a voter backlash against progressive politics, economic decline, dissatisfaction with aggressive climate policies, and growing resistance to immigration. Trudeau's hold on power was further destabilized last month when the New Democratic Party, which had been supporting his minority government, announced its withdrawal of support.

This announcement came shortly after the resignation of Finance Minister Chrystia Freeland, who stepped down due to disagreements with Trudeau's spending proposals. Freeland, who also served as deputy prime minister, left the cabinet because she believed Trudeau was not taking adequate measures to prepare for a potential trade war with Washington.

Calls for Trudeau's resignation have grown louder within his party as the Liberal Party's poll numbers have fallen. The public blames Trudeau for rising costs and housing shortages, which have been exacerbated by more lenient immigration policies.

Public opinion polls conducted in late 2024 and early this year show Trudeau's approval rating has dropped to around 20%, and the Liberal Party is trailing the Conservatives by more than 20 percentage points.

"With Trudeau's pending resignation, it looks like a Conservative-led government is closer to being on the way in Canada, and we can now say with greater than 50% certitude that the Conservatives or a Conservative-led coalition will govern Canada in 2025," Thierry Wizman, Global FX & Rates Strategist at Macquarie, said.

"That realization should help the CAD stand up; the USD/CAD might very well have already made a top — i.e., sooner than it otherwise would have — on a better structural growth outlook for Canada postelection."

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Source: Investing.com