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CAD and Keystone pipeline key amongst US midterm elections - BAML

FXStreet (Barcelona) - Ian Gordon, FX Strategist at Bank of America Merrill Lynch explained that the US midterm elections are a week away.

Key Quotes:

“It is hard to tell, as markets have had other macro risks on their mind recently”.

" Polls suggest the Republicans are likely to take over the Senate, giving them control of both Chambers of Congress while there is a 61% chance Republicans will take over the Senate according to a recent poll from Fivethirtyeight (see full report for footnote)1]."

"Our economics team argues the election is likely to have a small impact on the economy, as we expect very few legislative breakthroughs to result even if the Republicans are successful in taking the Senate. President Barack Obama has two more years in office, so the US will still be divided, dampening hopes for an end to Congressional paralysis."

"However, prospects for the long-awaited Keystone pipeline would improve with a GOP victory. Bottom line: CAD would be supported short-term with Keystone's passage, but we do not see it as a long-term game changer. Canadian producers have found alternative means of transport as Keystone has languished, relieving the once acute supply disruptions, and dampening the longer-run currency impact."

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