06:50 AM EDT, 04/29/2025 (MT Newswires) -- Canadian media projects that the Liberal party has won Monday's parliamentary election and Mark Carney has been confirmed as prime minister, said ING.

The results have, however, been much narrower than implied by polls, wrote the bank in a note. Liberals are currently projected at 167 parliament seats, short of the 172 majority. That would mean that, as in the previous legislature, they will need to bring the New Democratic Party -- with seven projected seats -- into a coalition government.

As ING had anticipated, the Canadian dollar (CAD or loonie) isn't liking the news of a minority Liberal win, as markets had likely priced a majority government as the baseline scenario. A thin parliament lead is hardly positive news for a country's currency, but CAD losses have been quite limited in size.

USD/CAD remains below 1.390 and is still primarily driven by United States events and the (US dollar (USD) leg, pointed out the bank.

In terms of longer-term implications, Carney has pledged to fight U.S. President Donald Trump harshly on tariffs, and his closer ties with European countries could emerge as an obstacle in trade talks along the way, added ING. Ultimately, the crucial issue remains renegotiating the USMCA early.

The Conservatives -- projected at 145 seats -- had more explicitly signaled their intention to do so. Carney might take his time, although his explicit intention remains to sit at the negotiating table and end the U.S.-Canada tariff war.

ING retains a broadly flat USD/CAD view for now, as the correlation between the two currencies has re-strengthened and observed volatility has meaningfully lagged those of other USD crosses. The bank expects most trading into the summer to happen within the 1.37-1.40 range, and it targets 1.39 for the end of Q2.