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Canada a big beneficiary of US spending

I continue to believe that Canada and Mexico are the big relatively winners of the Georgia runoff. That win ensured a higher level of spending and growth in the US coming out of the pandemic and much of that will spill across the borders.

Trade risks were mostly lowered by the new NAFTA deal but they weren’t eliminated and now the state of play is also much better for both. Some of that has already been reflected in moves in the currencies but the trend will continue.

The biggest tailwind to come is from commodities. Oil will soon become a tailwind for the loonie and that’s especially true of Trudeau can find a way to get the Keystone XL pipeline built. Biden has been quiet on that since the election and there might be a deal to be made. That’s a spot to watch in the weeks ahead.

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