Geopolitics and the FOMC driving the greenback higher
USD - US Dollar
If the early year dollar weakness had been driven by the search for value outside of US asset markets, then rising tension in eastern Ukraine and the accelerated correction in global equity markets might just reverse those flows as investor preference for dollar liquidity grows. What is clear is that rising geo-political risk and the ongoing re-assessment of growth stocks have very much started to weigh on currencies.
In the short term, we expect investors to play it safe and favor the dollar for liquidity purposes. European currencies whose economies have greater exposures to Russian natural gas imports presumably remain more vulnerable. For now expect the USD to continue to dominate with bigger moves to come after the Fed tomorrow evening.
CAD - Canadian Dollar
There was no hiding place for the loonie yesterday, which broke above resistance at 1.2600/25 and traded at 1.2700, before funding some support as U.S. equities rallied 4% from the lows. We expect further volatility today as markets continue to price in geopolitical risk. Domestically, most expect the BoC policy decision tomorrow to result in a 1/4 point tightening in monetary policy, the first in a series of rate hikes aimed at getting inflation and inflation expectations back under control. We expect tomorrow’s policy meeting outcome to signal a hike which will effectively mark the start of a series of rate increases in Canada which takes the Overnight Target Rate to 2% by the end of the year. Higher short-term yields will provide the CAD with significant support in the coming months.
EUR - Euro
EUR/USD has had a very low correlation with US equities over the last three months. However, until events in Ukraine become clearer, we would presume the much greater exposure of European economies to the crisis. Currently, 1.1265 looks the bias for EUR/USD heading into tomorrow's FOMC - unless we see any substantial de-escalation of tension in Ukraine. Look for the euro to struggle over the next several days with events in Ukraine and the FOMC meeting driving direction.
GBP - British Pound
Over the last week, events in Ukraine and the global equities decline have moved the focus away from inflation/tightening and toward a flight to safety leaving the GBP/USD more vulnerable. Domestically, calls for PM Johnson's resignation/removal are at an all-time high, but the BoE and risk story is far more relevant for the GBP right now. If Johnson resigns, his replacement is likely to be considered as a safe set of hands, and don't see any political risk premium built into the GBP.
Get access to our market experts and sign up to receive the latest updates on any currency with our real-time exchange rate reports.
Sign up to receive the latest market news from our experts.
Who can use the MTFX payment service?
Individuals and businesses who need to send money in foreign currency internationally can use MTFX’s services. The beneficiary of the transfer must have a bank account for the funds to be paid into.
Personal clients usually use our services to transfer money between their own accounts in two different countries.
Business clients usually use our services to transfer funds to suppliers, fund international operations, or repatriate overseas earnings.
Why should I use MTFX and not my own bank?
MTFX offers currency exchange rates that are 2-5% better than those offered by the banks. Personal clients usually save hundreds of dollars per transfer and for larger transfers, the savings can run into the thousands.
We also offer excellent customer service, dedicated currency specialists, and a 24/7 online platform with best-in-class technology that allows you to complete transfers from any device virtually anywhere in the world.
Business customers save with better currency exchange rates and proven solutions geared towards managing and mitigating foreign exchange risk. Our solutions include forward contracts, market orders, rate alert services, and much more - all backed by great technology and great people.
How do customers send funds to MTFX?
Funds can be transferred via wire transfer, Electronic Funds Transfer (EFT), or ACH payment services. MTFX maintains bank accounts in all major currencies with highly-rated banks. Our banking infrastructure ensures that you can transfer funds to us quickly and securely.
How long does it take MTFX to transfer funds?
Our global network of banking partners allows us to get funds to virtually anywhere in the world quickly and efficiently. Most wire transfers from MTFX will be received by your beneficiary within 24-48 hours. MTFX also offers same-day transfers that are almost instantaneous, as well as low-cost in-country payment services for your less urgent transfers. For further information please speak to one of our currency specialists.