Why is the USD/CAD an important market?
The currency pairing of the US to Candian dollar (USD/CAD) is one of the most traded pairs in the foreign exchange market, representing a significant quota of daily trade. It's a pair which is popular amongst veteran traders and newcomers alike.To get more news about
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USD/CAD trading hours
The forex market is available 24 hours a day, but UK trading, in particular, tends to get active from 8:00 AM and taper off from 5:00 PM. Of course, there will be times during the day when this currency pair experiences higher volumes - typically around major market announcements.
History of USD/CAD
The US dollar needs no introduction and is paired with all the main world currencies. It dates back to 1792, when the United States Congress created the US dollar as the country's currency. It serves as legal tender in a number of countries and is it still regarded as the world’s unofficial reserve currency.
Back in the early 1850s, Canada began its departure from the colonial pound and transitioned to a decimalised Canadian dollar. It’s often referred to as the ‘Loonie’. The Canadian dollar used to be pegged to the USD but since 1970, it has been a free floating currency controlled by the Bank of Canada.
Role of USD
As the most traded currency in the world, the US dollar is affected by a variety of factors. One of the most influential of these are the various reports issued by the US Federal Reserve Bank (Fed). This data can help traders understand how the market may change in the future.
The Bureau of Labor Statistics releases Non-Farm Payroll numbers for the US, usually on the first Friday of each month. This data can produce volatility in the value of the USD, and of course, affect the USD/CAD currency pairing.
As with all currencies, economic and political events and occasional crises can play a part in affecting the fluctuations in the exchange rate. News and data about the US economy and politics are constantly available and should be followed to keep up to date with factors which can influence the markets.
Role of CAD
The Bank of Canada can be a major influencer of the value of the Canadian dollar. It enacts policies that try to promote economic and employment growth, although it hasn’t directly intervened in the currency since 1998.
Canada is a large exporter of materials and commodities, such as wood, grain, minerals, petroleum etc.. Being so close to the US has strengthened the import/export industry in Canada and helps the currency maintain a strong hold in the foreign exchange market.
How to trade USD/CAD CFDs
An individual can trade USD to CAD with either a forex contract or alternatively, they can trade a contract for difference (CFD) on a particular currency pair, and speculate on the price difference.
A CFD is a financial instrument typically between a broker and an investor, where one party agrees to pay the other the difference in the value of a security, between the start and end of the trade. You can either hold a long position (speculating that the price will go up) or a short position (speculating that the price will fall). This is considered a short-term investment or trade as CFDs tend to be used within a limited timeframe.
For instance, to trade the American to Canadian dollar (USD/CAD) currency pair using CFDs, you speculate on the direction of the underlying asset. If you think the US dollar will appreciate then take a long position by buying the CFDs. If you think the US dollar will lose value against the Canadian dollar then you would take a short position by selling CFDs.
Why is the USD/CAD an important market?
