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Trading USD/CAD

You will learn about the following concepts

  • Introduction to USD/CAD pair
  • US dollar versus the loonie
  • Exchange rate factors
  • Examples

The USD/CAD is the fourth most traded currency pair in the Forex market. This also makes it one of the most popular currency pairs among binary traders, so you should not be surprised when you see that many of your fellow binary traders closely follow the news around the loonie, as Canadian dollar is also known.

Since this pair belongs to the Majors, there is plenty of information about it on the web – you can quickly find lots of macroeconomic and political news, as well as tons of trading strategies and detailed fundamental and technical analysis forecasts.

US dollar versus the loonie

us-dollar-vs-loonieAs you can see, this pair consists of two currencies – the U.S. dollar which is the base currency, and the Canadian dollar which is the quote currency. In short, the value of the USD/CAD represents how many Canadian dollars must be spent in order to acquire one U.S. dollar.

As of September 11th the current value of USD/CAD is 1.1015, so anyone who intends to buy one U.S. dollar, using the Canadian currency, will have to spend 1.1015 Canadian dollars.

Exchange Rate Factors

exchange-rate-factorsThe value of this currency pair is determined by the economic climate in the United States and Canada. Any crisis or expansion, that concerns one of these economies will almost certainly have a negative or a positive impact on the value of USD/CAD.

The interest rates set by the Bank of Canada and the Federal Deserve are also an important factor when determining the exchange rate of the USD/CAD. A major difference in interest rates will surely make one of the currencies stronger compared to the other one.

Policy measures taken by the Federal Reserve can strengthen the U.S. dollar and therefore make the value of USD/CAD higher, because the U.S. dollar will gain ground and the Canadian dollar will lose ground.