Loonie at 3-month high as Canadians vote in general election

• Canadian dollar trades slightly firmer vs US dollar
• Easing of US-China trade tensions supports CAD

The Canadian dollar edged higher against its US counterpart on Monday, hitting a new three-month high, as millions of Canadians cast their ballots in the country's 43rd general election.

At 09:37 a.m. (1337 GMT), the Canadian dollar was trading up 0.1% at 1.3114 to the greenback, or 76.26 US cents.

Canadians vote on Monday to determine whether Prime Minister Justin Trudeau, who swept into office four years ago as a charismatic figure promising "sunny ways," will remain in power after two major scandals.

Trudeau's Liberals and the main opposition Conservatives led by Andrew Scheer are in a neck-and-neck race, according to opinion polls.

"Domestic attention is squarely on the 43rd Federal election today," Shaun Osborne, chief market strategist, at Scotiabank in Toronto, said in a note.

"Historically, Federal elections do not appear to have had a significant impact on the underlying trend in the CAD and we suspect that 2019 may be little different," Osborne said.

"After some noise around the vote, we think FX players will refocus attention on the Bank of Canada policy outlook, the Fed and international backdrop pretty quickly," he said.

On Monday, trade sensitive currencies were firmer and the safe-haven greenback was slightly weaker amid fresh signs of progress in a long-awaited resolution to the US-China trade war.

White House adviser Larry Kudlow said in an interview with Fox Business that tariffs scheduled for December could be withdrawn if trade negotiations continue to go well.

Trade-related tensions have been a big worry in recent months for investors who fret about its impact on global growth. Canada runs a current account deficit and is a major exporter of commodities, including oil, so its economy could benefit from a pick-up in global growth.

Canadian government bond prices crept lower on Monday, with the two-year falling 3 Canadian cent to yield 1.655% and the 10-year falling 18 Canadian cents to yield 1.565%.