USDCAD TECHS: Remains Vulnerable

The second half of 2022 has seen a steady improvement in the number of American voters who report that the country is headed in the "right direction."

• According to RealClearPolitics, a majority of Americans believe that the country is on the wrong track (63.4%) but that number has strengthened since July 5 when 76.4% of the country reported that the country was on the wrong track, a record for the period covered by the RCP metric.
• The aggregated polling chart shows a similar trajectory to President Biden's approval rating which strenthenged in late summer following a string of legislative successes in Congress, the cooling of energy prices, and then further improved after a better-than-expected Democrat performance at the midterm elections.
• Both polling trends are likely due to increased confidence amongst Democrat-leaning voters in the performance of the Biden administration.

Figure 1: Direction of Country, Six-Month Chart (Real Clear Politics)

German Chancellor Olaf Scholz and French President Emmanuel Macron are expected to meet with incoming Brazil President Luiz Inacio "Lula" da Silva in Brazilia shortly after his inauguration on January 1, according to Reuters sources.

• Reuters: "The sources said details were expected to be decided only after Lula's inauguration on Sunday."
• The trips may signal an attempt by western leaders to push for closer diplomatic relations with Brasilia after a period of unpredictable policy direction during the administration of outgoing President Jair Bolsonaro.
• Courting Lula will be seen as particularly important to Western leaders including US President Joe Biden as Brazil is seen a crucial to managing Chinese influence in Latin America and achieving climate targets.
• Pushing Lula too hard for support on Russia is unlikely as a return to Brasilia’s traditional non-aligned approach to foreign policy is expected.
• Andre Pagliarini, a professor at Hampden-Sydney College: “Lula holds that Brazil benefits most from an independent foreign policy that does not go out of its way to ingratiate itself with the US or its geopolitical rivals du jour."

According to Morning Consult, a plurality of US voters no longer believe that the US has a responsibility to protect Ukraine from Russia.

• The Morning Consult report shows that 40% of voters believe that supporting Ukraine is a US responsibility, down from 47% in March.
• The report also shows that 24% of voters now believe that the US is doing to much to support Ukraine, down from 12% in March.
• The polling data will be a concern to US lawmakers and the White House who have declared that they will support Ukraine for "as long as it takes."
• President Biden today signed the USD$1.7 trillion FY23 omnibus which includes USD$47 billion in additional aid for Ukraine offsetting concerns that funding for Ukraine will be blocked by the GOP when it takes control of the House of Representatives next week.

Figure 1: US Voter Concern, Backing for Ukraine in 2022 (Morning Consult)