USD: Expectations of a rapid US economic recovery and even overheating, once the lockdown restrictions are eased, have been driving US treasury yields and global bond yields higher. The bond vigilantes’ argument is fairly simple. Congressional Budget Office estimates the current US output gap to be c.3% of GDP and the Biden administration is trying to pass through US Congress a fiscal package of c.9% of GDP. This comes on the back of the December stimulus of c.3% of GDP that has already led to a blowout retail sales print in January. Also boosting the yield rally is growing government bond supply as well as the rebound of global commodity prices. Moreover, the USD weakness persists and fuels the commodity price rally as investors that, with may sectors of the US economy still shut down, any fiscal stimulus would only aggravate the US trade deficit and hurt the USD. For today, US data in the form of personal spending and the PCE deflator shouldn’t necessarily upset the bond market. Yet we fear we are in a fragile window for asset markets, where a continuation of this correction can drive the dollar broadly stronger. We cannot rule out, say, a further 2% advance in the DXY, but would still see this is a bear market bounce.
CAD: Could remain supported especially if market expectations of a fairly aggressive growth rebound in 2021 and thus a BoC QE taper materialize. That said, we also believe that the recent CAD rally has captured most of these positives already. We further note that some important downside for the currency lingers like the green energy policies, a more persistent negative impact from Covid on the global demand for fuel and a potential thawing of the relationship between the US and Iran, all of which could undermine the longer-term outlook for oil prices and thus the outlook for the CAD. In all, we upgrade our outlook for the CAD but see fairly limited upside for the currency this year with any more meaningful gains likely to come in 2022.
EUR: The early rise in European debt yields is being resisted by ECB speakers as an unwarranted tightening of financial conditions. This puts the focus fairly and squarely on Monday’s report of ECB PEPP activity, where a dramatic step-up in buying will be needed to be seen to avoid a further bond sell-off. We expect EUR/USD higher over the medium term to range between 1.20-1.25. Look out for a speech from ECB’s Schnabel.
GBP: This looks to be another bull market correction in Cable and would suspect buyers return anywhere near the 1.38 area. In effect, recovery hopes expressed in the bond market aren’t going to kill the recovery.
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.