Election Jitters Hit Markets: CAD Stays Steady Amid Elevated U.S. Hedging Activity

Today's expected range for the Canadian Dollar against the major currencies:

US Dollar        1.3800-1.3990

Euro                 1.5020-1.5230

Sterling            1.7930-1.8140

WTI Oil (opening level) $71.96

The CAD is opening at 1.3881 ( 0.7204)

CAD is still trading in a narrow range. It will likely stay in this range until after the election in the USA is settled. Then we could see the range come back to the traditional range of 1.36-37 or travel north of 1.40 to 1.43. Both are possible given the way the vote goes.

One of my favorite authors offered this insight into the guessing game of thrones

It’s D-Day for the U.S. markets—election week is here, and the stakes are high. As voters head to the polls, investors are bracing for possible turbulence, with the put/call ratio recently spiking to 1.61, the highest level since August 5, 2024. Back then, a surge in volatility shook the markets following a dramatic JPY carry-trade unwind, and this elevated put/call ratio suggests that investors are once again turning cautious.

In simple terms, more market participants are trading puts than calls, indicating a rise in hedging activity as they seek to insure their portfolios against potential downside. With key sectors like technology, healthcare, energy, and defense highly sensitive to policy outcomes, hedging strategies—such as buying SPX puts and sector-specific options—can provide a valuable buffer against election-driven market reactions.

U.S. elections often introduce volatility as policies affecting taxes, regulation, and spending shift with new administrations. Traders adjust positions based on anticipated policy changes, which can create price swings across the market. While predicting the election outcome or its market impact is challenging, hedging can help investors protect their portfolios.