Liberals Most Likely to Form Canada Government, Macquarie Says

A minority government led by Justin Trudeau’s Liberal Party is the most probable outcome of Canada’s Oct. 19 election, a result that could weaken the country’s currency over the longer term, according to the Canadian unit of Macquarie Group Ltd.

The party has a greater chance of winning than may be indicated by current polls, according to a report by Toronto-based Macquarie analysts David Doyle and Brendan Livingstone, who estimate the probability of a Liberal minority is 45 percent. Voters leaning toward the New Democratic Party may eventually switch to the Liberals in order to defeat Harper, they said.

“The NDP may continue to lose support, as there are a large proportion of Canadian voters who are focused on supporting ‘anyone but the Conservatives’,” the analysts said in the report. “With the race close and the Liberals appearing to be on the rise in the polls, support may continue to shift in their direction.”

Macquarie put the odds of an outright Liberal majority at 10 percent, a Conservative Party minority government at 35 percent and a Conservative majority at 10 percent.

Liberal governments may lead to a weaker Canadian dollar, in part because of Trudeau’s pledge to run budget deficits, which may also make the Bank of Canada less likely to cut interest rates given the additional government spending stimulus, the analysts said.

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