XE Trade USD-CAD exchange rate spread: avoid weekends and holidays!
First published on September 27, 2014
I’m a fan of XE Trade for making online currency transfers, and most of all for sending money internationally.
If you go to xe.com, you’ll find the mid-rate exchange rates. The rates provided by XE Trade are always “worse” than the rates on xe.com, since XE Trade adds their own margin. I’ve discovered that XE Trade rates are always even worse on weekends; I decided to record the spread on various days for the USD to CAD exchange rate. Here’s a sampling of the exchange rate spread from September 2014 taken on different days at random times of the day.
| Date | Day of week | xe.com | XE Trade | Spread |
|---|---|---|---|---|
| September 1 | Monday (holiday) | 1.08681 | 1.123 | 0.03619 |
| September 2 | Tuesday | 1.09040 | 1.1066 | 0.0162 |
| September 3 | Wednesday | 1.08991 | 1.106 | 0.01609 |
| September 4 | Thursday | 1.08414 | 1.1008 | 0.01666 |
| September 5 | Friday | 1.08857 | 1.1051 | 0.01653 |
| September 6 | Saturday | 1.08815 | 1.124 | 0.03585 |
| September 8 | Monday | 1.09249 | 1.1086 | 0.01611 |
| September 9 | Tuesday | 1.10285 | 1.1188 | 0.01595 |
| September 12, 7:32am Pacific | Friday | 1.10713 | 1.1235 | 0.01637 |
| September 12 | Friday, 4:40pm Pacific | 1.10935 | 1.1452 | 0.03585 |
| September 16 | Tuesday | 1.10195 | 1.1178 | 0.01585 |
| September 27 | Saturday | 1.11545 | 1.1515 | 0.03605 |
Bottom line: use XE Trade only on business days! Also, according to the sample from late on Friday September 12, you should make sure to do any currency trades before markets have closed. Based on my tests, the average spread on business days was 1.622%, whereas on non-business days it was 3.5985%. That’s almost a 2% difference.
On a related note, if you are making USD-CAD currency transfers within a business account in Canada, some of the banks’ currency exchange services might provide better rates than XE Trade. Specifically I’ve found that RBC‘s rates are often better than XE Trade. It’s much more of a pain trying to send money internationally from a business account using RBC, though!
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September 28th, 2014 at 7:07 am
scruss says:
Hi Peter — the only thing I remember from my brief spell in back-end development for currency trading is that spread is smaller when volume is higher. That’s why you should make your exchanges on weekdays. Volume also explains why you can get much lower spreads/commissions on popular pairs (like USD/EUR) than rarer ones (GBP/CAD, say).
I wouldn’t be at all surprised if other forex houses used the same (fixed rate + small random noise) spread value for weekend/holiday trades that the place I worked may have used … — Stewart