USD CAD: Live Canadian Dollar-US Dollar Rate, Chart, Forecast
The USD is the world’s major reserve currency and is pretty much the benchmark in the foreign exchange market. The CAD or Canadian Dollar is not as popular as its neighbour, but is still the 6th most frequently traded currency in the world. This makes the USD CAD currency pair a popular one.
What is USD CAD? Overview
The CAD is one of the top 8 currencies in the world that account for over 80% of forex trade. As an example, if USD/CAD is trading at 1.245, this means 1 USD will get you 1.245 CAD.
How is this decided? Basically, this is called an exchange rate. It is the price of one currency in terms of another currency. Exchange rates are always fluctuating because they are being traded 24/5. Alternatively, you can use the USD to CAD converter to calculate the accurate exchange rate.
An USD/CAD currency implies how much CAD 1 USD will get. While USD/CAD is 1.245, when you go to a bank, you might get only 1.2. This is because the difference between the market exchange rate and the bank’s exchange rate is the profit that the bank earns. You can also use the USD CAD calculator to find out the exact exchange rate.
USD CAD Chart
The chart below gives an idea of how the AUD has moved compared to the USD over the last one week.
How to Read the USD CAD Chart
The chart looks pretty similar to a stock chart but it isn’t. The graph doesn’t show a price but an exchange rate. It’s a line graph which is one of the simplest graphs to read. It shows the movement of the USD to the CAD over a period of one month. The x-axis represents the time and date over the week.
USD CAD Historical Data
The CAD has held up remarkably well against the USD. The USD vs CAD rate has largely moved in a range of 1.18-1.3 in the last 40 years. The CAD was actually stronger than the USD on two occasions, once during the 2007 Global Financial Crisis when the exchange rate fell to 0.92 and once again in 2011 when it fell to 0.98.
USD CAD Exchange Rate History
In 2002, a couple of years after the Internet bust, the Loonie dropped to 1.61 against the USD. Barring these periods of volatility, the USDCAD exchange rate has largely remained stable. It is one of the most liquid currency pairings in the forex market, and is a relatively safe pairing to trade for traders in the market.
USD CAD Exchange Rate Today
Looking at the USD CAD history, the currency pair has fluctuated quite a bit. There have been three major developments that have impacted the USD/CAD pairing. In April, Bank of Canada announced that the country’s economy was making a healthy recovery from the pandemic and it would commence with a reduction in quantitative easing. Essentially, it said it would stop pumping easy money into the economy.
This caused the CAD or the ‘Loonie’ as it is popularly known to strengthen against the USD. 1 USD to CAD went from 1.25 in April to 1.2 in June. The three-month rally was one of the strongest ones for the CAD. However, at the end of June, the US Federal Reserve announced that it would also move to a hawkish stance soon and would taper its $120 billion a month bond purchases. This led to the USD becoming stronger and by the end of June USD/CAD was at 1.25. It strengthened further to 1.28 by September.
The beginning of October 2021 saw oil prices move up, and this caused the Loonie to rally again. Since then, the USD to CAD has fallen to 1.25 as the CAD has gained around 3 pennies.
What Influences USD CAD Exchange Rate
1. Monetary Policy
Economic decisions by the Bank of Canada and the US Federal Reserve have significant impacts on the exchange rate and the USD to CAD forecast. In 2021 alone, two of three major movements in the pairing came because of their decisions. The first one was when Bank of Canada announced it would reduce the supply of easy money and the second one was when the US Fed said it would do the same.
2. Oil Prices
Canada is one of the world’s largest oil producers. Oil is traded in USD. Whenever the US imports a large amount of oil from Canada, the CAD strengthens against the USD and the CAD becomes stronger. In October, when oil prices began to rally the USD CAD rate fell to 1.2 before recovering. The higher oil prices move, the stronger the CAD gets.
3. Inflation
Inflation is a global problem. As economies all over the world were hit by the pandemic, central banks resorted to flooding markets with money. While this ensured liquidity remained in the system, it also meant that inflation has kept creeping upwards. While both USA and Canada have dismissed inflation as transitory, its not going away anywhere. High inflation will mean a weak CAD.
4. The U.S. economy
The US and Canada conduct a lot of trade between them, and economic conditions in the US invariably impact life in Canada. Though their economic policies are like chalk and cheese, the ‘USA Effect’ does spill over to Canada. However, not all changes in the US affect Canada the same way. A financial bust in the US (like the 2007 Global Financial Crisis) could see the CAD getting stronger while a tech boom in the US (like the 2000 Internet boom) could see the CAD getting weaker.
5. Economic Data
This includes data like GDP, retail sales, economic decisions, industry data, political stability and elections, and new government policies.
6. Geopolitics
The world is pretty volatile right now when it comes to geopolitics. US-China relationships are at a low and this could bearishly affect the CAD.
7. Commodity Prices
Apart from oil, Canada is also a major exporter of different commodities. The CAD is often called a commodity currency.
USD CAD Forecast and Predictions
There are two possible scenarios that could play out which will impact the USD/CAD pairing. The first one is that Bank of Canada could raise interest rates as early as April 2022 instead of its earlier estimation of raising it in the second half of 2022. In late October, Canada’s central bank said that it expects inflation would be high for most of 2022 because of high energy prices and supply chain constraints. If this happens the CAD will strengthen against the USD and the USD/CAD pairing could come down to 1.2.
The second scenario that might play out is that Canada’s economy will not recover as soon as its central bank expects it to. The pandemic keeps rearing up its head every few months, and multiple experts have said that supply chain constraints won’t go away for at least a year. They expect Bank of Canada to continue with its dovish policy for some time. The housing market in Canada has started to cool off after a very hot 2020 and early 2021. Experts believe that the central bank will not raise rates if the housing market continues to slow down. These experts believe that there is limited upside to the CAD.
Why Trade USD CAD Today?
The USD/CAD currency pairing is one of the most stable ones out there. There are several reasons to trade the USD/CAD.
Liquidity: Both these countries have some of the largest economies in the world. This makes this pair one of the most liquid pairings in the forex market. High liquidity leads to lower slippage costs which adds up to a decent amount in the long run.
Steady Pairing: Historically, the USD/CAD pair has moved in a stable range. There are no nasty surprises while trading this currency pair.
Sufficient Volatility: Even though the USD/CAD pair has been steady for over 40 years (barring a few Black Swan events), there is sufficient volatility within the range that enables traders to generate profits. This is a good pairing for both technical and fundamental traders.
Market Timings; Though the forex market functions 24/5, the USD/CAD pair is uniquely positioned in terms of market timings. Both countries are neighbours and their economies run in a similar fashion for a large part. News for both countries is also released around the same time which takes away uncertainties from the time zone.
Where Can I Invest in the USD CAD Pair?
There are hundreds of forex brokers and websites where you can trade in USD/CAD. However, it is essential that you choose on which is trustworthy and is compliant with myriad international rules and regulations. One of the best forex brokers to use is ZFX.
ZFX or Zeal Capital Market is based out of London and offers traders several options to trade across different markets like forex, commodities and cryptocurrencies. The company doesn’t assume any market risk and that helps it focus on “sourcing the best prices in the institutional marketplace using cutting edge technology and providing best in class trading services.”
How to Trade USD CAD Now
It’s very easy to start trading USD/CAD on ZFX. All you have to do is:
1. Open a ZFX Account
You register on ZFX by submitting your full name, mobile number and email. Then, you will get a verification code on your mobile and you set up your password. You can then choose between three accounts: Mini, Standard and ECN. Voila! Your account is ready.
In case you are unsure about trading on ZFX and want to test it out, you can opt for the Demo Account. This is a training account that let you experience the ZFX interface without actually trading with money. It occurs in a risk-free, controlled environment. Think of it as a practice account. Once you are sure that this is the right one for you, you can opt for a Live Account.
2. Make your First Deposit
The minimum amount of deposit you need to start trading is $50. If you opt for an ECN account, the minimum deposit required is $1,000. You can make deposits through bank transfers or credit cards. The minimum deposit required is $50 and ZFX doesn’t charge any fee for deposits.
An ECN account stands for Electronic Communication Network. This type of account lets traders have direct access to other market participants through interbank trading prices. Think of it as a closed auction group. The spreads here are tighter and the prices are better. This is a more transparent environment for traders.
3. Verify your Account
Once you have done this, your account needs to be verified. You need some documents for this: A national ID card, driver’s license or passport. Then, you have to scan or photograph select pages of your ID and upload them on ZFX. You have to upload a photo of your bank book or a copy of your bank statement. The photo should be the same as the bank account you set up when you opened your trading account with ZFX.
4. Start Trading
Now that you are all set up, you can start trading. You just have to download MT4 from ZFX. The MT4 is a great trading tool. With its powerful analysis tools, a wide variety of instrument options and fully scalable and mobile compatible programs, MT4 is one of the most popular Forex trading platforms in the world.
Tips for USD CAD Beginner Traders
A currency pair like USD/CAD is a smart entry point for beginners because of its tight spreads and limited range movement. It’s on, you might feel you have what it takes to master the forex markets. However, it is always good to start with the fundamentals. Before you enter the world of forex trading, here are a few tips to get started.
Understand the markets: Spend a few days or tens of hours just observing the markets. Study USD/CAD thoroughly, figure out patterns and movements, and factors that influence the currency pair.
Keep it simple: If you are a technical trader, keep your strategies simple. Look for support and resistance levels and trade on bounces from there at first.
Recognize patterns: The USD/CAD has a tendency to make sharp movements in either direction and then spend a significant amount of time in consolidation. Once you start recognizing patterns like these, it gets easier to predict currency movements.
Start with a demo account: You have spent 10 hours a day for two weeks just studying the market and you are sure you have understood how the game is played. Great! Now is the time to test all your theories. Sign up with the Demo Account on ZFX and put your hypothesis to the test. You will get a chance to trade USD/CAD in a risk-free environment and make your early mistakes there.
Stay updated with all news on USD/CAD: This is a no-brainer but you have to keep updated with all the news that could affect USD/CAD. Fundamental traders should recognize that data releases tend to cause major movements in the USD/CAD exchange rates.
Bottom Line: Is USD CAD a Good Investment Now?
The USD/CAD pairing is one of the most stable ones in the forex market with high levels of liquidity and sufficient volatility that enable traders to profit. As the world continues its slow recovery from the pandemic and the supply chain bottlenecks, this currency pair will continue to fluctuate providing ample opportunities to make money. It is an excellent currency pair to invest in.
