Financial Post: How the upbeat outlook for the Canadian dollar likely just got trashed

Corpay Cross-Border Solutions chief market strategist Karl Schamotta on the Canadian dollar: “Since the abduction of Maduro on the weekend, we have seen lower oil prices acting as a bit of a headwind on the Canadian dollar,” he said in an interview. “This seems to be related to the idea that lower oil prices for a prolonged period of time are going to limit the scale of investment in the energy sector in Canada … that necessarily lowers the growth outlook for the Canadian economy.” But, oil prices aside, “Schamotta said lower expectations of future interest rate cuts in the U.S. are what’s really pushing down the loonie. Analysts at the end of 2025 were betting on as many as two cuts by the U.S. Federal Reserve, which would tighten the interest rate differential between the loonie and the greenback and make the former more attractive to investors. Now, those rate-cut bets are under review. “We are seeing a hawkish repricing in U.S. growth and monetary policy expectations. Traders came into this year heavily bearish on the U.S. dollar,” Schamotta said, due to expectations of slowing growth, rising unemployment and a Fed ready to cut rates. “Traders are questioning some of those assumptions.””

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