The loonie moved down 0.13 of a cent to 90.09 cents US as traders looked to Wednesday and a highly-anticipated election call by Quebec's minority pro-independence PQ government, along with the next interest rate announcement by the Bank of Canada.
Premier Pauline Marois is expected to call an April 7 vote on Wednesday. Marois is aiming for a majority mandate as the perceived front-runner, thanks to her government’s controversial-yet-popular secularism charter and analysts think the dollar could step back in response.
Speculation has been rife for weeks that Marois might take advantage of recent poll numbers to call an election.
But Camilla Sutton, chief FX strategist, managing director Scotiabank Global Banking and Markets, thinks the international community might not have picked up on it.
"If there is an election called tomorrow, I think it is a potential negative risk to the Canadian dollar," she said.
"It’s certainly an uncertainty which markets don’t like."
But Sutton adds she wouldn’t expect a big move in the loonie.
Meanwhile, the central bank is widely expected to hold off on raising its key rate from one per cent until early next year.
Sutton also doesn’t expect major changes in language in the bank’s statement.
"It’s likely to be a very similar tone that we got at the end of January."
Russian troops invaded the Crimean peninsula in eastern Ukraine over the weekend, where Russia has major military installations and much of the population is Russian-speaking. Although tensions are still high, they were ratcheted down somewhat after Russian President Vladimir Putin ordered tens of thousands of Russian troops participating in military exercises near Ukraine’s border to return to their bases.
Putin also said he hopes that Russia won’t need to use force in eastern Ukraine. The Kremlin, which does not recognize the new Ukrainian leadership, insists it made the move into Crimea in order to protect Russian installations in Ukraine and its citizens living there.
Oil and gold gave back a big chunk of the gains racked up on Monday with the April crude contract in New York down $1.59 to US$103.33 a barrel.
April bullion fell $12.40 to US$1,337.90 an ounce while May copper gained four cents to US$3.21 cents after slipping two cents Monday
Elsewhere on the economic front, February employment data for Canada and the U.S. will be released on Friday. Canadian job growth is expected at around 19,000 jobs.
U.S. employment gains are expected to come in around 150,000 with results impacted by severe winter weather for a second month in a row.