07:14 AM EDT, 03/10/2025 (MT Newswires) -- Canada's Liberal party picked a leader on Sunday, noted Societe Generale.

Mark Carney, former Bank of Canada and Bank of England governor, replaces Justin Trudeau and will be sworn in as prime minister this week.

Early elections are possible after the Liberals closed the 20 percentage points deficit with the Conservatives in the polls, wrote the bank in a note to clients.

The decline in full-time employment gains in Canada to 19,700 needs to be viewed in light of the increase of 244,000 since last September, but it's the uncertainty of United States trade tariffs on businesses that may tempt the Bank of Canada to lower rates Wedneday by 25bps to 2.75%, the mid-point of the neutral range, stated SocGen.

New 25% U.S. levies on aluminium and steel go live from Wednesday and 'reciprocal tariffs on Canadian lumber and dairy products before that.

The upside risks for USD/CAD outweigh the downside potential in the near term but a return above the 1.4540 area would be required for the pair to line up a return towards the February high of 1.48, added the bank.