Latest news with #Schamotta
Business Recorder
6 days ago
- Business
- Business Recorder
Dollar eases against euro
NEW YORK: The dollar eased against the euro on Tuesday after US consumer prices increased moderately in July, leaving intact the case for a Federal Reserve interest-rate cut next month. The consumer price index rose 0.2% last month after gaining 0.3% in June, the Labor Department's Bureau of Labor Statistics said on Tuesday. In the 12 months through July, the CPI advanced 2.7% after rising 2.7% in June. Economists polled by Reuters had forecast the CPI rising 0.2% and increasing 2.8% year-on-year. 'Underlying inflation remains subdued, giving policymakers room for maneuver as they respond to signs of incipient weakness in labor markets,' Karl Schamotta, chief market strategist at Corpay, said. 'Chair Powell should put a September cut on the table when he speaks at Jackson Hole on the 21st,' Schamotta said, referring to the Fed's Jackson Hole Economic Symposium later this month. Currency markets had been in a holding pattern earlier as expectation grew that a moderate reading on US price pressures could cement bets for a Fed rate reduction next month, which increased after last week's soft payrolls data. The euro erased earlier losses against the buck to trade up 0.06% at $1.16235. The greenback pared gains against the yen to trade 0.17% higher at 148.390 yen. 'Yield differentials are narrowing against the dollar across the policy-sensitive end of the curve, and the greenback is coming under sustained selling pressure against its advanced-economy rivals,' Schamotta said. 'This could persist through the end of the summer if incoming data releases confirm a deceleration in the US economy,' he said. Still, with the jury still out on the impact of tariffs on global growth, predicting how the dollar will react through the end of the year remained challenging, Schamotta said. On Tuesday, speculation about a change of leadership at the Fed was back as Former St. Louis Federal Reserve Bank President James Bullard said he would accept the role of Fed Chair if it was offered to him. Bullard told CNBC that he would accept the job 'if we can protect the value of the dollar ... that'll give us lower interest rates over time; if we aim for low and stable inflation, (and) respect the independence of the institution under the Federal Reserve Act'. Meanwhile, Sterling was up 0.4% on the dollar at $1.34805 after data that showed Britain's jobs market weakened further, albeit more slowly, while wage growth stayed strong - the latter underscoring why the Bank of England is so cautious about cutting interest rates. The numbers ought not to cause the Bank of England to accelerate the speed of its rate cuts. The BoE cut rates only last week in a tight 5-4 vote. The Australian dollar fetched $0.64945, down 0.3%, after the Reserve Bank of Australia's widely-expected decision to cut rates by a quarter point. The central bank cited a slowdown in inflation and a looser labor market, though it was cautious on prospects for further easing. Currency markets largely ignored Trump's decision to extend a pause in sharply higher tariffs on Chinese imports for another 90 days, as widely expected. Cryptocurrency bitcoin was about flat around $119,395, after climbing as high as $122,308.25 on Monday, taking it close to the all-time peak of $123,153.22 from mid-July.
Reuters
7 days ago
- Business
- Reuters
Dollar eases as US inflation data keeps September rate cut on table
NEW YORK, Aug 12 (Reuters) - The dollar eased against the euro on Tuesday after U.S. consumer prices increased moderately in July, leaving intact the case for a Federal Reserve interest-rate cut next month The consumer price index rose 0.2% last month after gaining 0.3% in June, the Labor Department's Bureau of Labor Statistics said on Tuesday. In the 12 months through July, the CPI advanced 2.7% after rising 2.7% in June. Economists polled by Reuters had forecast the CPI rising 0.2% and increasing 2.8% year-on-year. "Underlying inflation remains subdued, giving policymakers room for maneuver as they respond to signs of incipient weakness in labor markets," Karl Schamotta, chief market strategist at Corpay, said. "Chair Powell should put a September cut on the table when he speaks at Jackson Hole on the 21st," Schamotta said, referring to the Fed's Jackson Hole Economic Symposium later this month. Currency markets had been in a holding pattern earlier as expectation grew that a moderate reading on U.S. price pressures could cement bets for a Fed rate reduction next month, which increased after last week's soft payrolls data. The euro erased earlier losses against the buck to trade up 0.06% at $1.16235. The greenback pared gains against the yen to trade 0.17% higher at 148.390 yen . "Yield differentials are narrowing against the dollar across the policy-sensitive end of the curve, and the greenback is coming under sustained selling pressure against its advanced-economy rivals," Schamotta said. "This could persist through the end of the summer if incoming data releases confirm a deceleration in the U.S. economy," he said. Still, with the jury still out on the impact of tariffs on global growth, predicting how the dollar will react through the end of the year remained challenging, Schamotta said. On Tuesday, speculation about a change of leadership at the Fed was back as Former St. Louis Federal Reserve Bank President James Bullard said he would accept the role of Fed Chair if it was offered to him. Bullard told CNBC that he would accept the job "if we can protect the value of the dollar ... that'll give us lower interest rates over time; if we aim for low and stable inflation, (and) respect the independence of the institution under the Federal Reserve Act". Meanwhile, Sterling was up 0.4% on the dollar at $1.34805 after data that showed Britain's jobs market weakened further, albeit more slowly, while wage growth stayed strong - the latter underscoring why the Bank of England is so cautious about cutting interest rates. The numbers ought not to cause the Bank of England to accelerate the speed of its rate cuts. The BoE cut rates only last week in a tight 5-4 vote. The Australian dollar fetched $0.64945 , down 0.3%, after the Reserve Bank of Australia's widely-expected decision to cut rates by a quarter point. The central bank cited a slowdown in inflation and a looser labor market, though it was cautious on prospects for further easing. "We remain of the view that a follow-up cut in November is more likely than not, with the cash rate to then stay at 3.35% for an extended period," said Adam Boyton, head of Australian economics at ANZ, in a note. Currency markets largely ignored Trump's decision to in sharply higher tariffs on Chinese imports for another 90 days, as widely expected. Cryptocurrency bitcoin was about flat around $119,395, after climbing as high as $122,308.25 on Monday, taking it close to the all-time peak of $123,153.22 from mid-July.
Yahoo
13-06-2025
- Business
- Yahoo
Rising oil prices on Israel attack on Iran could revive Canadian dollar's 'petrocurrency status,' analysts say
Oil prices are climbing higher due to rising tensions in the Middle East and that is lifting the Canadian dollar against most of its G10 counterparts, highlighting its on-again, off-again role as a 'petrocurrency.' The price of the world's two benchmark crudes jumped nearly 10 per cent before retracing some of those gains after Israel launched attacks on military and nuclear sites in Iran early Friday morning. Brent, the overseas benchmark, and West Texas Intermediate, the North American benchmark, were both trading well above US$70 a barrel. That represents a significant increase from Thursday, when they were trading in the US$68 to US$69 per barrel range and a big jump from early May, when prices fell to around US$55 per barrel. There are fears that Iran could strangle oil shipments since it controls the Strait of Hormuz, through which 26 per cent of the world's crude exports pass. The Canadian dollar on Friday morning was up against haven currencies, including the Swiss franc and Japanese yen, as well as the euro and British pound. 'The Canadian dollar is outperforming most of its advanced-economy brethren as rising crude prices drive buying interest,' Karl Schamotta, chief market strategist at Corpay Currency Research, said in a note. 'Correlations between the loonie and oil prices have tended to peak when the West Texas Intermediate benchmark has entered the US$75-US$100 per barrel range.' Crude at US$75 a barrel is above the breakeven production point for Canadian oil producers. Schamotta said that means investment in Canadian energy could rise, possibly bringing the 'loonie's 'petrocurrency' status back to life.' Analysts at Bank of Nova Scotia also see upside for the Canadian dollar due to the price of oil. 'The (Canadian dollar)/crude correlation is historically positive and oil price gains present a reliable source of support for the Canadian dollar,' Shaun Osborne, chief FX strategist, and Eric Theoret, FX strategist, said in a note, adding this week has been good for the Canadian dollar. On top of the increase in crude prices, 'fundamentals have improved significantly,' including the possible narrowing of the gap between Bank of Canada and United States Federal Reserve monetary policy. The Canadian dollar on Thursday rallied against the greenback after U.S. inflation came in more tepid than expected, causing markets to increase bets that the Fed will start cutting interest rates sooner than expected. On Friday, the loonie was down 0.12 per cent against the greenback as investors chased the U.S. dollar as a haven play, though some analysts said the currency should have increased more after Israel's attacks. OPEC head lashes out at net-zero targets Gas prices have dropped — but will they stay down? 'It's another testament to the loss in value of the dollar's safe haven status,' Francesco Pesole, FX strategist at ING Bank NV, said to Bloomberg. The U.S. dollar index, which measures the greenback against a basket of other currencies, including the Canadian dollar, is down 10 per cent since mid-January. • Email: gmvsuhanic@
Yahoo
10-04-2025
- Business
- Yahoo
Canadian dollar on a tear, rising above 71 cents U.S.
The Canadian dollar on Wednesday rose above 71 cents U.S. for the first time since early December, while its American counterpart is being severely weakened by the uncertainty and chaos that Donald Trump's trade war has unleashed. The loonie was up 1.4 per cent in early trading Thursday as part of a surge that started Wednesday after Trump announced a 90-day pause on higher reciprocal tariffs, reducing the levy on most countries to a baseline of 10 per cent, but hiking duties on China to 125 per cent. Canada was exempt from the most recent set of tariffs, but remains subject to a 25 per cent levy on steel, aluminum and automobiles, though that levy can be reduced based on the value of U.S.-made auto parts contained within any vehicle. Canadian exports to the U.S. that are not compliant with the Canada-United States-Mexico Agreement remain subject to a 25 per cent tariff. 'The (U.S.) dollar is weakening once more as the initial optimism sparked by yesterday's tariff reversal yields to a more measured assessment of the risks still facing the U.S. and world economies,' Karl Schamotta, chief market strategist at Corpay Currency Research, said in a note on Thursday as the dollar index, which measures the greenback's value against a basket of major currencies including the loonie, continued to tumble. Following Trump's latest tariff climbdown, the U.S. dollar index dropped 1.34 per cent. However, it has been on a steady decline since mid-January as economists and analysts warned his plan to punish trading partners for perceived unfair practices could cause significant harm to U.S. businesses, consumers and the economy. The dollar index is down 7.7 per cent since Jan. 13, the peak of a run-up that began a few months before U.S. election day, when Trump's prospects for the winning the presidency began to improve. At that time, Wall Street expected markets to benefit from a candidate they perceived as business friendly. With the U.S. economy looking more vulnerable, the odds of a U.S. Federal Reserve interest rate cut are rising, which helps 'tilt interest differentials against the greenback,' Schamotta said in an email. Investors pumped up the greenback in the chase for yields caused by higher U.S. interest rates as central banks around the world, including the Bank of Canada, reduced their policy rates. For example, the Fed's policy rate stands at 4.5 per cent at the upper end compared with the Bank of Canada's 2.75 per cent. Still, 'Canada, Europe, and Japan all stand to benefit as investment flows become more diversified,' Schamotta said. But he said in his note that the safe-haven Japanese yen and the euro appeared to be benefiting the most from Trump's latest reversal. The fallout from U.S. tariffs on Canada hasn't changed much, but 'what's important is the delay in the reciprocal tariff for the rest of world, as it implies less negative global and U.S. growth spillover to Canada,' Noah Buffam, an analyst with CIBC Capital Markets's fixed income currency and commodity group, said in a note on Thursday. He also said he was looking for the Canadian dollar to 'underperform' other currencies against the U.S. dollar as the year progresses. Certainly, there are more headwinds blowing Canada's way that could pull the loonie down. Stephen Brown, deputy chief North America economist at Capital Economics Ltd., said they've rescinded their call for a recession in Canada, but still think the country's gross domestic product will 'slow to a crawl' and that inflation will rise, leading to three more rate cuts by the Bank of Canada to bring the lending rate to two per cent. Canadians shun car trips to the U.S. on tariff anger, weak loonie Canadian dollar looks through Bank of Canada rate cut and tariff mayhem That will likely play against the loonie, he said in a note Thursday morning. 'We still expect interest rate differentials to move against the loonie as markets come around to our view that the Fed is unlikely to cut this year, which suggests the loonie will drop back below 70 cents U.S. soon, to perhaps $0.69,' Brown said in an email, noting that is an improvement from an earlier forecast for the loonie to fall to 67 cents U.S. 'The outlook has improved a bit now that we have a bit more clarity on U.S. tariff plans,' he said. • Email: gmvsuhanic@ Sign in to access your portfolio
