FX Week Ahead: It’s all about the ECB this week. Domestically, the loonie is expected to fly
USD: The greenback’s momentum shouldn’t extend much further
Spot
DXY92.54
Week ahead bias
Mildly Bearish
Weekly range
92.00 – 93.00
1 month target
92.50
The cautious tone by the Fed’s Powell last week on the risks of persistent inflation was not enough to trigger a recovery in risk sentiment. That said, most continue to expect the greenback to maintain a bid this week and likely trade higher against its counter parts. There isn’t much happening this week data wise, but the possibility of a dovish ECB on Thursday is likely to provide yet another boost higher to an already well supported USD.
Though the greenback remains supported in the short term, most don’t see this trend extending in the coming months. Currencies with more hawkish central banks are likely start appreciating rapidly against the greenback as interest rate divergence begins to firmly support these pro-tapering economies vis-à-vis the US.
CAD: Despite the current loonie weakness, the outlook remains positive
Spot
USD/CAD1.2578
Week ahead bias
Mildly Bearish
Weekly range
1.2430 – 1.2620
1 month target
1.2300
The Bank of Canada did what most of the market was expecting this past week by tapering the bond buying program by another $1bn. Given the current economic conditions and growth expectations, analysts expect the BoC to end their asset purchase program by the end of the year and possibly bring forward their first expected rate hike from H2 2022 to H1 2022.
This week’s economic calendar is pretty much empty. Global external drivers and market sentiment are likely to dominate and provide direction for the week. Of interest will be whether oil will find a bottom over the coming days and reverse course after a few weeks of weakness. Given the BoC’s hawkishness and the underlying support of a strong economic recovery, most expect the Loonie to reverse course and gain against the USD and its other G7 peers.
EUR: Its all about the ECB this week
Spot
EUR/USD1.1816
Week ahead bias
Mildly Bearish
Weekly range
1.1700 – 1.1910
1 month target
1.2000
The ECB meeting scheduled for Thursday remains the key event for FX this week. The key here will be communication from the ECB with regard to future monetary policy given last week’s release of the ECB’s strategic review.
Most analysts expect the EUR/USD to run lower as there remains a strong possibility that the ECB will shift toward a dovish stand which will likely underscore recent EUR/USD downward trend. While not a talking point for next week, the ECB dovish bias would suggest that the total reduction of the monthly purchases in 2022 will be less than previously expected. Beyond the ECB meeting, the focus will be on the July PMI manufacturing and services readings due on Friday.
GBP: The fate of the GBP/USD will almost certainly be impacted by the ECB
Spot
GBP/USD1.3837
Week ahead bias
Mildly Bearish
Weekly range
1.3690 – 1.3940
1 month target
1.4000
The GBP is tied to the EUR and given the downside risks to the EUR, most expect the GBP/USD to follow suit. Markets expect the GBP/USD to test the 1.3750 should the ECB strike a dovish tone. There was a small shift in communication this past week by the BoE with Deputy Governor Ramsden indicating there may be a need to taper asset purchases sooner rather than later. However, markets dismissed the comment given that any such move remains well into the distant future.
On the domestic data front, focus will be on June’s retail sales and July’s PMI manufacturing and services data. On the Covid front, despite the increase in Covid-19 cases, the UK government is likely to continue with its full reopening plans on the 19th of July.
Currency Chart
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.
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.
Who can use the MTFX payment service?
