USD/CAD seems to be the most favorite couple of our users here at toolstrades.com. And with good reason. It is not prone to high volatility and changes in the monetary policies of both countries are not that frequent. If anything, we are left staggered when American and Canadian economy are experiencing changes and shifts in policies.
All I can say is that USD/CAD is playing an important role in our everyday trading. But do we really know a lot of things about the couple? I don’t think so. So, for our today’s topic of discussion, lets dive into interesting facts about USD/CAD couple.
1. Heavy oil connection.
2. Popularity.
3. Names.
4. Economies.
5. Exchange rate
1. Heavy oil connection.
Canada is the top exporter of oil in the world. And US is number one producer of oil in the world. This means that economies of both of the countries heavily rely and are very dependent on the crude and per-barrel price of it.
And it is natural to assume that as soon as the prices or oil fail, so do the currencies. With this being said, Canadian dollar is much more dependent on oil prices than its American counterpart. The is exactly the reason why when the prices for oil fall, we go to see how the couple is doing. And of course, most of the time we can see the chart grow due to the plummeting CAD.
2. Popularity.
Of course, USD/CAD cannot compete with the leader of currency market – EUR/USD – the most traded couple in the world. But I can say that it has done very well for itself, as for now it is the 6th most popular currency couple in the world.
3. Names.
‘Loonie’ is the nickname for the Canadian dollar. It was given to it because of the image of the loon that can be found on $1 coin.
And of course, USD has the nickname ‘greenback’ which comes well… from the green backs of the banknotes.
4. Economies.
Economies of the United States and Canada are intertwined. 70 percent of all the goods produced in Canada are exported into the USA. This gives the USA the right to be the most important importer of Canadian goods of all of Canada’s trading partner.
This, of course, put Canada in a very difficult position when Donald Trump decided to impose trade tariffs on the nation. This decision could potentially threat the whole system and bring substantial damage to Canadian economy. One that the country would take years to recover from.
But, fortunately for Canada and all of us, this never came to be. American is so deep in the trade war with China that one can say that Canada is safe for the time-being.
5. Exchange rate
Major factors that influence the USD/CAD exchange rate are GDP growth, inflation and unemployment rates, and relations between the Federal Reserve Bank and the Bank of Canada’s interest and inflation rates. The two countries are very different when it comes to monetary policies and their approach towards their economies can be reflected in the strength of both of them to withstand pressure and hard time.
Of course, this doesn’t really get in the way of both of the countries to be in the top 10 strongest economies of the world with USD heading the list.
