The Canadian dollar strengthened sharply to 1.39 per USD in November, hitting its highest level in more than two months as the US dollar broadly retreated following Democratic gains in the US midterm elections. The outcome led investors to reassess prospects for US economic growth amid expectations of tighter scrutiny on AI investment and potential resistance to new data-center projects. The loonie was also supported by hopes that trade tensions between Canada and the United States will ease, as a Democratic majority could limit some of President Trump’s trade policy initiatives. The dispute dates back to February 2025, when Trump announced sweeping tariffs on Canadian goods, triggering retaliatory measures from Ottawa. Although products compliant with the USMCA were subsequently exempted, additional duties have remained in place on steel, aluminum, and automotive imports. At the same time, Canada recorded a C$5.4 billion trade surplus in September, its largest since May 2022 and above market expectations of C$4.1 billion.