USD/CAD - ratio US Dollar and Canadian Dollar.
The US dollar against the Canadian dollar is a popular a currency pair due to large-scale interstate trade activity between the United States and Canada. In trading slang, the pair is called" Loonie " (Loonie) after the name of the Canadian one-dollar coin.
The symbolic designation of the currency coincides with the traditional dollar sign -$, so they add the letters CA$, C$, in the market Forex the letter combination CAD is valid. Canada has adopted this currency name (dollar) back in the 19th century, after gaining independence from Britain.
Features of the Canadian economy and currency
The currency of Canada belongs to the main and reserve currencies, ranking seventh in terms of turnover in the foreign exchange market Forex. The International Monetary Fund allows the use of this currency when the country accumulates gold and foreign exchange reserves.
The geographical proximity to the developed US economy makes exchange rate pairs react sharply to "American session", in the European session to be led by a pair EUR/USD with an inverse correlation.
The Canadian economy is resource-oriented: the peculiarity of the Canadian dollar is the sensitivity to price changes in energy resources (oil and gas).
Recently, Canada's well-established economic ties with the Asia-Pacific region have played a significant role. Traders notice a partial shift in activity from European on Asian session.
The Bank of Canada, established in 1935, abandoned the gold standard before the meeting of the international monetary conference in Jamaica, which initiated its abolition and created a market for free conversion of national currencies. The Canadian dollar was pegged to the American dollar, it became freely convertible in the early 70s. Having been in demand for 10 years, the "Canadian" reached its "ceiling" at the rate of 1.65 per US dollar. The scientific and technological revolution in the United States in the early 90s established the parity of the neighbors ' currencies, almost equating the rates 1 to 1.
Impact of monetary policy
The currency pair is subject, like any other, to the influence of the course of the current monetary policy. On the basis of the Bank of Canada Act, this issue is under the jurisdiction of the Central Bank of the state. This is a major player in the Forex currency market, which ensures the reliability of the national currency, its issue. By managing gold and foreign exchange reserves and the interest rate, the Bank strives to keep inflation in the range of values from 1% to 3%. An interesting fact is that the head of the Bank of Canada, after 15 years of experience in his position, retired to manage the Bank of England.
The Bank of Canada has been gradually reducing the interest rate level over the past two years, but despite this, it is at the level of 0.5%, higher than that of the" neighbor " of the United States. In the foreign exchange market, the state has received a long-term stable trend of the weakening of the national currency, adjusted after the Fed raised the rate.
Based on the difference in rates in the countries that own the currencies included in the pair, swap of various sizes, depending on the direction of the transaction, when holding a position for more than a day.
The state is gradually abandoning the printing of paper money, switching to plastic options. The dimension of the exchange rate of the USD/CAD pair is one decimal place, the number of decimal places is regulated by the Broker, usually 4 or 5 (1.33884).