How to Trade the USD/CAD Forex Pair
Learn how to trade USD/CAD forex pair, what influences its price and how to perform a solid USD/CAD analysis.
The USD/CAD currency pair stands for the Canadian against U.S. dollar. It’s one of the most traded currency pairs in the world and is also called trading the “loonie”, which is the nickname of the dollar coin in Canada. In this video we’ll talk in a bit more detail about the basics of USD/CAD forex trading.
The two most important things that you have to consider when doing a USD/CAD analysis, just like with most major currency pairs, is the influence of the two central banks in Canada and the U.S. The Bank of Canada (BoC),the FED and the difference in their interest rates influence the currency pair the most.
For example, USD/CAD trading levels can change when the U.S. central bank makes the country’s currency stronger (and vice versa with the BoC). Positive and negative news from the two economies are also important variables in any USD/CAD trading strategy – GDP numbers, unemployment and inflation on both sides of the border, all have a role to play if you want USD/CAD explained.
If you’re studying forex trading for beginners it’s vital that you remember the second factor that impacts the value of the Canadian dollar – it has a very high correlation with oil prices (among other comodities). With Canada’s economy being essentially intertwined with oil, the price of crude can determine how well the country’s economy is doing, as well as the price levels of the currency itself. This has earned the Canadian dollar’s characterisation as a “commodity currency”.
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