Mark Carney emerged victorious in this evening’s Canadian election – reflecting voter confidence in the Prime Minister’s technocratic background and his commitment to defending the country’s economic sovereignty amid ongoing trade tensions with the United States – but his Liberal Party looks unlikely to achieve a majority, meaning that it will be forced to work with a partner, like the Bloc Quebecois or the New Democratic Party to pass major legislation.

An upset is possible, but according to CTV, the early results suggest that the Liberals will fall short of the 172 seats needed to push them over the threshold needed to form a majority. The Canadian dollar is slipping against the greenback as traders brace for the complications that a less unified governing coalition could present.

The result is far better for the Liberal Party than that expected just a few months ago, when US President Donald Trump began making annexation threats and raising tariffs. But the long-term implications of Carney’s victory will depend on his ability to gain the parliamentary backing needed to implement difficult economic reforms and negotiate an incredibly-fraught relationship with the current occupant of the White House – and tonight’s result could make that far more difficult.

With more than 10 percent of overall employment reliant on trade and roughly 77 percent of exports going to the United States, Canada is facing a period of severe economic weakness, compounded by a decades-long failure to increase productivity and wean itself off a real estate-driven growth model.

For currency traders, Carney’s experience – as a managing director at Goldman Sachs, Governor of the Bank of Canada, and Governor of the Bank of England through a series of global crises – is seen as giving him a unique opportunity to steer his party toward the centre, unify multiple levels of government around a growth-enhancing agenda, and put the country’s trade relationships on a more sustainable footing. But without a solid mandate from voters, the Prime Minister’s honeymoon period could prove remarkably short, meaning that further volatility is likely in the dollar-Canada currency pair.