CAD Fundamentals Remain Strong; But Loonie Dragged By Risk Appetite
In response to a very uncommon net weekly gain for US equities markets, the CAD concluded the week with a slight gain versus the USD. Although weaker commodity prices shouldn't be disregarded, the CAD's fortunes continue to be highly correlated with the current risk environment. Despite easing back to its lowest point since March, the Bloomberg Commodity Index is still up more than 30% year-over-year. However, as fears about global growth deepen, copper prices have fallen by about 20% so far in June. Over the same time period, the price of crude oil has decreased by about 7%. Recession threats may affect crude prices to some extent, but restricted supplies, constrained room for output growth, and worries about energy security indicate that crude prices may stay reasonably high even if recession fears intensify in the upcoming months.
CAD Fundamentals remain strong
Going into Q3, the majority of analysts are still optimistic about the CAD. The robust economy and the Bank of Canada's policy stance, which leans hawkish, are key factors supporting the CAD. Strong April retail sales statistics released last week, which showed respectable volumes as well as price increases, continue to support steady growth patterns in Q2. Although tight labour markets and growing compensation should partially halt spending, weaker housing market data points to the possibility of some consumer restraint later in the year. The Bank of Canada will need to continue with its tightening plans for longer than its counterparts, and probably a little more forcefully than others in the coming months. Strong growth combined with strong inflation, which offered another upside surprise for price measures, also suggest aggressive tightening by the BoC. However, unless the overall risk backdrop calms down, the CAD might not be able to reflect many, if any, of these advantages in its currency valuation.
Not much happening this week
This week's data schedule is extremely light, and market activity still has a strong holiday vibe. The only noteworthy data report in Canada is the GDP for April. The weekend before July 4th is bracketed by Friday's Canada Day market shutdown, so liquidity and participation are quite likely to remain on the low side. The coming week in the US includes a number of significant data points. We receive further information about regional Fed action, a new interpretation of the June Consumer Confidence number, and June ISM Manufacturing statistics.
Sign up to receive the latest market news from our experts.
FAQs
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.