June 2015 Newsletter

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    In This Issue:

  • FX Market Insights
  • Turn Your Flexibility Into Your Advantage
  • Interest Rates - Key Drivers of the USD/CAD
  • Greek Bailout Talks Said to Be Going Nowhere

Turn Your Flexibility Into Your Advantage

Foreign Exchange Forward Contracts Explained

Do you have flexibility in your payments and cash flow? If so, you can use that flexibility to your advantage.

Olympia’s sophisticated trading platform allows our clients to enter market orders at a set exchange rate. Our system monitors the global currency markets 24 hours a day on your behalf. If the market reaches your desired exchange rate, your order is filled and you will be contacted by your trader to complete the transaction.

Market orders can lower your costs and improve your bottom line by allowing you more control over when the transaction takes place and at what rate. Market orders allow you to turn your flexibility into an advantage.

Greek Bailout Talks Said to Be Going Nowhere.

Until some sort of terms are finalized regarding a Greek bailout, the future of the Euro in the near term remains uncertain. Greece remained far apart from its international creditors on a deal to unlock needed bailout aid, with the two sides unable to even agree on the amount of progress made thus far.

After a Greek official said the country will start drafting an accord in late May Prime Minister Alexis Tsipras told reporters that a solution is close. The European Commission however has responded to say a deal is not imminent and that a lot of work remains to be done.

Time is running out for Greece to receive funding ahead of almost 1.6 billion euros in IMF payments scheduled for next month, with the first of the transfers due June 5.

As of May 27th, and as the talks continue to drag on, the European Central Bank left the level of emergency cash available to Greek banks unchanged from a week ago at 80.2 billion euros. Greek lenders still have a liquidity buffer of about 3 billion euros.

The Bank of Greece didn’t ask for added funding because deposit outflows have stabilized, a Greek government official said. However, ECB and Bank of Greece spokesmen declined to comment. The lenders are reliant on the emergency assistance to stay afloat because they’ve lost access to capital markets and the ECB’s regular financing operations. Progress does not seem to be keeping pace with approaching deadlines leaving the future of the Euro uncertain.

Market Insights - April 2015 Recap
Please direct all comments on the newsletter to FXinfo@olympiatrust.com.

Interest Rates - Key Drivers of the USD/CAD

Interest rates set by the world’s Central Banks are one of the key drivers of currency trends and major rate fluctuations. In the United States, the overnight rate is referred to as the federal funds rate, while in Canada, it is known as the policy interest rate.

The overnight rate is a firm indicator of the health of a country’s overall economy and banking system. The overnight rate, in turn, has an effect on employment, economic growth, inflation, and currency exchange rates.

Understanding where the major banks forecast both Canadian and U.S. interest rates to go is arguably the most relevant information you could watch in terms of the direction of the USD/CAD exchange rate moving forward.

In the chart you will see that the general consensus across the board from the five major Canadian banks is that they expect the Bank of Canada to hold rates steady, with the small possibility of a single rate cut as far out as Q2 2016, while the expectations are unanimous that during this same period the Federal Reserve will raise rates by approximately 3/4 %. If the next year pans out as these banks forecast, it may be some time before we see a “strong” Canadian dollar again. For more information on how you can protect yourself against long term currency trends against your favor, watch our short Forward Contract Video