The events in Ukraine this week have overshadowed whatever we've seen in terms of economic or monetary policy, and it appears that geopolitical risks will continue to overshadow financial markets for some time. Despite the extraordinarily unpredictable geopolitical background, what has come from North America this past week shows that policymakers there are not being distracted from their focus on inflation and will continue to tighten monetary policy steadily.
The Bank of Canada raised rates, as expected, and hinted that there was more to come
The Bank of Canada raised interest rates, as predicted, and signaled that there will be more in the months ahead. Policymakers at the Federal Reserve have expressed similar sentiments. In both cases, policymakers were less certain about the prospects for balance sheet reduction, but what has emerged more clearly, we believe, is a stronger sense that policymakers at the Bank of Canada and the Federal Reserve believe they are currently behind the rate curve and must work to catch up. The fact that this has occurred to them at the same time as Europe faces its most serious conflict since WWII is unfortunate, but we believe that, despite developments in Europe, higher rates are likely in both Canada and the United States due to North America's relative isolation from direct Russian economic and financial ties.
Loonie closed the week around 1.2750 for the sixth straight week
While correlations remain broadly weak, the pick-up in the CAD/crude correlation suggests that WTI trading around $110 has provided a bit of a prop for the CAD through last week as the BoC tightened interest rates. The CAD, however, reverted to recent type and form as the week progressed, dropping amid additional stock market losses and finished the week around the 1.2750 level for the sixth week in a row. The CAD's failure to fully benefit from more hawkish monetary policy and rising commodity prices continues to worry investors. The CAD has however strengthened strongly against European FX, gaining significant ground against the EUR. Fair value market models suggest that the CAD is trading close to fair value now estimated at around 1.2816 against the USD. Check the USD/CAD Currency Conversion Chart.
The Week Ahead
The week ahead is weak on data, and Fed officials are in the black out phase ahead of their meeting on March 16th. On Monday, Canada reveals trade statistics, and on Friday, it releases employment data. The CAD's drop versus the US dollar last week signals that USD/CAD will trade in a volatile range for the foreseeable future. More turbulent range trading is expected, but the CAD is unlikely to weaken too much above the 1.28 level against the USD.
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.