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Need to send money abroad around Valentine's day? Getting your timing right is important, so learn more about whether February 14th really affects the Forex market.
When looking at Canadian consumer spending trends, a noticeable blip can occur on February 14th or Saint Valentine's day. People tend to open their wallets wider around this time to spend on special gifts like jewelry, boxes of chocolate, bouquets of roses, expensive restaurant meals, and sparkling wines.
Therefore, there may be a higher reading than expected for core retail sales MoM¹, which measures the changes in Canada's consumer spending at the retail level, excluding automobiles.
This is an important economic indicator, and robust retail sales indicate that Canada's economy is expanding. This results in a positive/bullish CAD, meaning the currency gains value.
In addition, Canada's international trade contributes significantly to its GDP. The country's top exports related to Saint Valentine's day include chocolate², wines³, flowers⁴, jewelry⁵, and more. High demand for these goods increases demand for CAD, which in turn increases its value.
It's great news if the Canadian dollar strengthens because you can convert your money into foreign currency at a favorable exchange rate. Of course, FX markets are highly volatile, so the currencies in question may be subject to various fluctuations due to a number of other factors.
There are two main reasons why Valentine's day typically correlates to more consumer spending. First, it's not just a day for couples. People also like to spend money on themselves, their kids, friends, pets, and other family members.
In addition, when people express love and appreciation for people they care about, the cost is usually not a factor. That's how Valentine's day industry makes huge profits – by increasing prices as demand for certain goods spikes on February 14th.
Interestingly, most purchases for Valentine's are made within two weeks⁶ of Valentine's day, so it's more than a single-day affair where consumer spending is higher than usual.
Valentine's day has an impact not just on people's pockets but also on forex markets. Since it's not a public holiday, stocks are open, and there may be a lot of volatility in specific markets on February 14th.
According to a survey by Canada's Retail Council, food and beverage and big box retailers enjoy higher profits around Valentine's. Some of these companies are included on the S&P/TSX Composite Index, which could close up or down, depending on investor mood.
Valentine's day is known to evoke emotional responses in people, which in turn could affect investor behavior. For example, when Valentine's day comes, stock returns might be lower as investors get hit by Cupid's arrow and focus on enjoying the day with loved ones.
In conclusion, Valentine's day influences consumer spending and forex markets. The CAD will likely strengthen, making it a good time for international money transfers, though stock markets might depreciate.
Are you planning to send money abroad this Valentine's?
MTFX has the right foreign exchange tools, such as currency charts and historical rates, plus competitive exchange rates, low transfer fees, and expert guidance to help you navigate Valentine's day effect to your advantage.
Create your free account now to get more love from your Canadian dollars when you send money abroad with MTFX this Valentine's day.
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