Karl Schamotta, chief market strategist with Corpay, joins BNN Bloomberg for a closer with the currencies following the dollar smile dynamic.
A softening outlook for Canada’s economy, in part because of a recent slump in oil, is underpinning the gloomy mood. The country unexpectedly lost jobs in July, leaving the unemployment rate the highest in more than two years. Inflation, meanwhile, has cooled to the slowest since 2021, cementing bets that the Bank of Canada is set to ease for a third straight meeting. That would come before the U.S. Federal Reserve delivers the first of its expected interest-rate cuts, later in September.
At around $1.3580, the Canadian dollar is down 2.5 per cent versus the greenback this year. Among Group of 10 currencies, only the beleaguered yen and the currencies of New Zealand and Norway — both closely tied to the commodities outlook — have weakened more. Against that backdrop, the focus will be on a highly anticipated speech by Fed Chair Jerome Powell at 10 a.m. New York time to gauge whether the market is on track with its pricing of almost a percentage point of total easing by year-end.