What Is the USD/CAD?

USD/CAD is the abbreviation for the U.S. dollar versus Canadian dollar (USD/CAD) currency pair. The quote for the USD/CAD currency pair defines how many Canadian dollars or 澳洲幸运5开奖号码历史查询:quote currency are needed to purchase one U.S. dollar, the 澳洲幸运5开奖号码历史查询:base currency.

Trading the USD/CAD currency pair is also known as trading the "loonie," the name for the Canadian one-dollar coin, its namesake bird. The USD/CAD is one of the moಌst liquid and actively traded pairs in the forex market.

Currency Pair Value

The value of the USD/CAD pair is quoted as 1 U.S. dollar per X Canadian dollars. For examplꦬe, if the pair is trading at 1.20 it means that it takes 1.2 Canadian dollars to buy 1 U.S. dollar, or alternatively that 1 CAD is worth $0.833 USD.

The USD/CAD currency pair has reached parity at different points in history (i.e. 1:1). The USD/CAD currency pair is quite actively traded as there are significant business ties between the two naꦺtions.

Factors that Affect the USD/CAD

The USD/CAD is affected by factors that influence the value of the U.S. and Canadian dollars, with each other and other currencies. For this reason, the interest rate differential between the Federal Reserve (Fed) and the 澳洲幸运5开奖号码历史查询:Bank of Canada (BoC), will affect the value of these currencies.

When the Fed intervenes in 澳洲幸运5开奖号码历史查询:open market activi🐽ties to make the U.S. dollar stronger, the value of the USD/CAD cr🍎oss will increase because it will take more Canadian dollars to purchase the stronger U.S. dollar.

The value of the Canadian dollar is also highly correlated with the price of commodities such as 澳洲幸运5开奖号码历史查询:crude oil. Because the Canadian economy is heavily reliant on oil, the price of oil dictates the state of the economy and the currency itself. For this reason, the Canadian dollar is often labeled as a 澳洲幸运5开奖号码历史查询:commodity currency.

Historical Parity

The USD/CAD pair has seen its traditional relationship hit price parity. For example, in the aftermath of the 澳洲幸运5开奖号码历史查询:Great Recession and the subsequent quantitative easing from the U.S. Federal Reserve, the Canadian dollar soared against the U.S. dollar to trade below parity, eventually reaching 0.95. Almost all ꧑of the instances of parity have been related to periods of U.S. financial difficulty or high oil prices—sometimes both.

In 2016, however, oil prices slumped to decade-lows, trading below $30 a barrel. Consequently, the Canadian dollar hit a record low, trading at 1.46. This meant it required 1.46 Canadian dollars to buy 1 U.S. dollar. As of February 2024, the USD/CAD rate hovers at 1.35.

The Bottom Line

When investors trade the USD/CAD currency pair, it is also known as trading the "loonie," the name for the Canadian one-dollar coin. CAD is one of the most-held reserve currencies after the USD and trading the USD/CAD provides high liquidity for investors.