Latest news with #KarlSchamotta
Reuters
3 days ago
- Business
- Reuters
Canadian dollar heads for fourth straight monthly gain as GDP beats estimates
TORONTO, May 30 (Reuters) - The Canadian dollar strengthened against its U.S. counterpart on Friday, and was headed for a monthly gain, as stronger-than-expected Canadian economic growth bolstered expectations the Bank of Canada would continue to leave interest rates on hold at a policy decision next week. The loonie was trading 0.4% higher at 1.3750 per U.S. dollar, or 72.73 U.S. cents, after moving in a range of 1.3740 to 1.3829. For the month, the currency was on track to gain 0.3%. That would be its fourth straight monthly advance, the longest such stretch since May 2021. Canadian gross domestic product increased at an annualized rate of 2.2% in the first quarter, eclipsing the 1.7% rise that economists had expected, as U.S. companies rushed to stockpile Canadian goods before the implementation of tariffs. A separate report showed GDP rising 0.1% in March from February, while a preliminary estimate for April also showed a gain of 0.1%. "The odds favour a hold at next week's Bank of Canada meeting," Karl Schamotta, chief market strategist at Corpay, said in a note. It's possible "that the flow of credit into Canadian households unleashed by last year's rate-cutting cycle is translating into more spending power," Schamotta added. Investors see a roughly 75% chance the BoC leaves its benchmark interest rate unchanged at 2.75% on Wednesday. The central bank moved to the sidelines in April for the first time since its easing campaign began last June. The price of oil , one of Canada's major exports, was trading 1.2% lower at $60.20 a barrel as investors weighed prospects of a potentially larger OPEC+ output hike for July. The Canadian 10-year yield was little changed at 3.205% as U.S. Treasury yields declined following data that showed American inflation was in line with expectations last month.
Yahoo
3 days ago
- Business
- Yahoo
Canadian dollar heads for fourth straight monthly gain as GDP beats estimates
By Fergal Smith TORONTO (Reuters) - The Canadian dollar strengthened against its U.S. counterpart on Friday, and was headed for a monthly gain, as stronger-than-expected Canadian economic growth bolstered expectations the Bank of Canada would continue to leave interest rates on hold at a policy decision next week. The loonie was trading 0.4% higher at 1.3750 per U.S. dollar, or 72.73 U.S. cents, after moving in a range of 1.3740 to 1.3829. For the month, the currency was on track to gain 0.3%. That would be its fourth straight monthly advance, the longest such stretch since May 2021. Canadian gross domestic product increased at an annualized rate of 2.2% in the first quarter, eclipsing the 1.7% rise that economists had expected, as U.S. companies rushed to stockpile Canadian goods before the implementation of tariffs. A separate report showed GDP rising 0.1% in March from February, while a preliminary estimate for April also showed a gain of 0.1%. "The odds favour a hold at next week's Bank of Canada meeting," Karl Schamotta, chief market strategist at Corpay, said in a note. It's possible "that the flow of credit into Canadian households unleashed by last year's rate-cutting cycle is translating into more spending power," Schamotta added. Investors see a roughly 75% chance the BoC leaves its benchmark interest rate unchanged at 2.75% on Wednesday. The central bank moved to the sidelines in April for the first time since its easing campaign began last June. The price of oil, one of Canada's major exports, was trading 1.2% lower at $60.20 a barrel as investors weighed prospects of a potentially larger OPEC+ output hike for July. The Canadian 10-year yield was little changed at 3.205% as U.S. Treasury yields declined following data that showed American inflation was in line with expectations last month. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Time of India
23-04-2025
- Business
- Time of India
Loonie's paradox: soaring against greenback, sinking against safe havens amid global uncertainty
The Canadian dollar is currently navigating a complex and somewhat paradoxical landscape in the global currency markets. While the loonie (Canadian dollar) is experiencing a notable upswing against its southern counterpart, the US dollar, it is simultaneously losing ground against traditional "safe haven" currencies. As investors globally seek refuge from the turbulence emanating from US financial markets, triggered by President Donald Trump 's aggressive tariff policies, the Canadian dollar, along with many of its peers, has benefited from a flight away from the greenback. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Guardian best-seller! 40s women take 'ceramide' and see skin transform… URUHIME MOMOKO Learn More Undo The US dollar index, which measures the dollar's strength against a basket of major currencies including the loonie, has plummeted by a significant 9% this year, underscoring this trend. However, a closer examination reveals a different story. The Canadian dollar has depreciated by 4.4% against the Swiss franc and 2.3% against the Japanese yen this month alone. Live Events This underperformance against these classic safe haven currencies signals a nuanced investor sentiment, where the loonie, despite its gains against the dollar, is not perceived as a primary shelter during heightened global economic fears. Karl Schamotta, chief market strategist at Corpay Currency Research, explains this phenomenon by pointing to the fundamental characteristics of safe haven currencies. These currencies are typically associated with nations boasting reliable legal frameworks and institutions, diversified economies, substantial net international investment positions (holding more global assets than foreign holdings domestically), and a status as net lenders to the global financial system. " Canada meets the first two requirements: it is well-respected and considered a safe place to invest," notes Schamotta. "But its heavy reliance on the US economy for export demand, its tendency to run trade deficits, and its relatively smaller net creditor position in international financial markets differentiate it from true safe havens." The initiation of Trump's "Liberation Day" – the unveiling of his reciprocal tariff plans – acted as a starting point for investors seeking safer harbors. According to Kyle Chapman, a currency market analyst at Ballinger Group, the primary beneficiaries of this "tariff threat" have been the Swiss franc, the Japanese yen, and surprisingly, the euro. While the Swiss franc and yen traditionally attract capital during periods of volatility, the euro has also emerged as a preferred alternative to the politically embattled US dollar. Nick Rees, head of macro research at Monex Europe Ltd., highlights the euro as a "chief recipient of haven flows" that would typically have flowed into the dollar. The Canadian dollar has also seen a decline against the euro this month, down by 2%. Interestingly, the Canadian dollar has demonstrated resilience against a broader spectrum of currencies, gaining ground against 21 counterparts ranging from the Polish zloty and South Korean won to the Brazilian real and Colombian peso, with an impressive 6.2% gain against the Colombian currency in April. Rees describes this loonie strength as "unusual," defying typical correlations with risk sentiment, equities, and oil prices, all of which have shown declines this month. The S&P/TSX composite index is down 3.9% in April, and West Texas Intermediate crude oil prices have fallen by 6.1%. Rees attributes the Canadian dollar's "outperformance" against this wider basket to a perceived easing of immediate tariff risks from the United States. While Canada has so far avoided reciprocal tariffs, it continues to grapple with existing US tariffs on steel, aluminum, and the non-US portion of completed vehicles. "However, we also see Canada as holding value as an alternative to the US, allowing investors to retain exposure to North American growth while remaining somewhat more insulated from Trump-specific risks," Rees suggests, indicating potential further upside for the loonie if it can continue to navigate the tariff landscape successfully. Looking ahead, the ultimate trajectory of the Canadian dollar remains intertwined with the unpredictable nature of US economic policy and its global ramifications. Schamotta cautions, "If problems in the US worsen to the point that we are facing a global economic or financial cataclysm, investors will quickly revert to their old ways, and the greenback will soar against the loonie," underscoring the inherent limitations of the Canadian dollar's safe haven status in a truly global crisis.
Yahoo
22-04-2025
- Business
- Yahoo
The Canadian dollar is diving against other major currencies despite gaining against the greenback
The Canadian dollar may be up against its counterpart in the United States, but it's diving against all major 'safe haven' currencies because of Canada's reliance on its southern neighbour. 'Along with virtually all its major peers, the Canadian dollar is rallying against the greenback as investors flee the U.S. financial markets, but it is also underperforming its safe haven counterparts as fear grips the world economy,' Karl Schamotta, chief market strategist at Corpay Currency Research, said in an email. The Canadian dollar is down 4.4 per cent and 2.3 per cent against the Swiss franc and the Japanese yen, respectively, so far this month, compared with a 4.1 per cent gain versus the greenback. The U.S. dollar has imploded since U.S. President Donald Trump unleashed his tariff tantrum against the world economy, with the U.S. dollar index down nine per cent this year. The index measures the greenback's value against a basket of major currencies, including the Canadian dollar. But the loonie has run into a wall where other major currency players are concerned. Haven currencies are linked to countries that have reliable legal systems and institutions, wide-ranging economies, large net international investment positions — meaning they hold more assets globally than foreign investors hold in their countries — and are net lenders to the world. 'Canada meets the first two requirements: it is well-respected and considered a safe place to invest,' Schamotta said. 'But it is heavily reliant on the U.S. economy for export demand, often runs a trade deficit and is a relatively small net creditor in international financial markets.' Trump's 'Liberation Day,' when he revealed his initial reciprocal tariff plan, sounded the gun for the race to shelter. 'The biggest winner from Liberation Day, the tariff threat, is the Swiss franc, yen and the euro,' Kyle Chapman, a currency market analyst at Ballinger Group, said. '(The) Swiss franc and the yen are safe haven currencies anyway — they typically tend to benefit from sort of volatile panic — and the euro as well is sort of a preferred alternative to the dollar.' The euro is not typically considered a haven currency, but it is currently benefiting from the high-risk environment. 'The single currency has been a chief recipient of haven flows that would typically benefit the dollar, but that on this occasion have headed the opposite direction across the Atlantic, fleeing political chaos in America,' Nick Rees, head of macro research at Monex Europe Ltd., said in an email. The Canadian dollar is down two per cent against the euro so far this month. But the loonie is performing quite well against a basket of other denominations from Asia to Latin America, Rees said. For example, the Canadian dollar is up against a basket of 21 currencies, from the Polish zloty and the South Korean won to the Brazilian real and Colombian peso. It has gained 6.2 per cent against Colombia's currency in April. 'The (Canadian dollar) resilience is unusual, defying not just risk conditions, but also typical sensitivities to equities and oil, with slides for both usually presaging a weaker Canadian dollar,' Rees said. The S&P/TSX composite index is down 3.9 per cent in April, while the price of West Texas Intermediate, the North American benchmark, is down 6.1 per cent. Rees attributes the Canadian dollar's 'outperformance' against the broader list of currencies to an easing of tariff risks. For the moment, Canada appears to have evaded the eye of the tariff storm after it dodged reciprocal tariffs, but it is still dealing with 25 per cent tariffs on steel, aluminum and the non-U.S. share of completed vehicles. 'However, we also see Canada as holding value as an alternative to the U.S., allowing investors to retain exposure to North American growth while remaining somewhat more insulated from Trump-specific risks,' Rees said, adding he sees more upside for the loonie if Canada can 'continue to dodge' the tariff threat. Loonie traders are betting on a steady outlook The Canadian dollar is on the rise But it's hard to perceive the full scope of Trump's policies and their fallout. 'If problems in the U.S. worsen to the point that we are facing a global economic or financial cataclysm, investors will quickly revert to their old ways, and the greenback will soar against the loonie,' Schamotta said. • Email: gmvsuhanic@ Sign in to access your portfolio
Yahoo
09-04-2025
- Business
- Yahoo
Canadian dollar strengthens as investors ditch US currency
By Fergal Smith TORONTO (Reuters) - The Canadian dollar strengthened against its U.S. counterpart on Wednesday as investors weighed signs of an exodus from American financial assets amid a widening global trade war and despite further losses for oil, one of Canada's major exports. The loonie was trading 0.7% higher at 1.4160 per U.S. dollar, or 70.62 U.S. cents, after touching its strongest intraday level since Friday at 1.4133. "For a variety of reasons, investors are bailing out of American financial markets," Karl Schamotta, chief market strategist at Corpay, said in a note. "The U.S. could soon find itself running smaller trade and financial imbalances, but at the cost of much lower growth rates." The U.S. dollar tumbled against a basket of major currencies as China said it will impose 84% tariffs on U.S. goods from Thursday, up from the 34% previously announced. U.S. "reciprocal" tariffs on dozens of countries took effect earlier on Wednesday, including massive 104% duties on Chinese goods. Yields on U.S. Treasuries, normally a safe-haven asset, jumped while Wall Street edged higher after heavy losses in recent days. "The CAD is taking the heightened market volatility and increased uncertainty in its stride, at least for now," Shaun Osborne, chief currency strategist at Scotiabank, said in a note. The price of oil hit a fresh four-year low, down 4.4% at $56.93 a barrel, as tariff increases stoked fears of a global recession. Japan and Canada, which is this year's chair of the G7 developed economies, have agreed to cooperate to maintain stability in financial markets and the global financial system, Japan's Ministry of Finance said. Canadian bond yields rose across the curve, but the moves were less than for U.S. bonds. The 10-year was up 1.8 basis points at 3.155%, after earlier touching its highest level since February 20 at 3.228%. Sign in to access your portfolio
