Saxo Group
Summary: Welcome to Canada, the land of beavertails, snow and more natural resources than you can shake a hockey stick at. From oil to timber and natural gas, Canada is one of the world's' major commodity exporters - which is why it's national currency, the Canadian dollar, is known as a commodity currency. As the sixth-most traded currency globally, the CAD accounts for 5% of daily trades.
USDCAD is abbreviation for the US Dollar/Canadian dollar currency pair. The exchange rate between these two currencies is quoted as 1 US Dollar (the base currency) per X Canadian dollars (the quote currency). So, if you see USDCAD quoted by a bank or exchange desk at 1.26 on your travels, you’d pay 1.26 Canadian dollars for 1 USD. While the two currencies have reached parity at some points, the US Dollar has traditionally been the stronger of the two.
What drives USDCAD?
USDCAD is driven by various factors affecting the value of the US Dollar and Canadian dollar in relation to each other. Economic indicators like the monthly US jobs report or interest rate announcements by the Federal Reserve and Bank of Canada (BoC) can all move USDCAD higher or lower.
Canada’s commodity exports – particularly oil – also play a major role in setting the value of the Canadian dollar. If the price of oil rises, the Canadian dollar should also rise – and vice versa. In 2016, for example, the Canadian dollar fell to a record low of 1.46 as oil prices tumbled below $30 per barrel, the lowest price in decades.
The call of the Loonie
It’s a trader’s tradition. Each major currency pair comes with a handy moniker and traders refer to USDCAD as the “Loonie”. Why? Canadians have nicknamed their one-dollar coin the Loonie as it features a loon on its face. With its famed mournful call, the loon has come to symbolise Canada, making “Loonie” an apt nickname for a currency tied so tightly to nature’s resources.
Trade USDCAD your way
With Saxo, you can trade USDCAD and other FX pairs with true flexibility. Buy and sell currency pairs with Spot FX, get a jump on future prices with FX options or hedge your exposure with FX swaps. You can also trade cryptocurrencies against USD and other major currencies with our Crypto FX pairs.
Please note that FX related instruments are traded with leverage and small price fluctuations can lead to larger losses if market volatility increases. FX markets are sensitive to political and macroeconomic events, which can drive prices higher or lower rapidly. Therefore, you should ensure that you understand the risks before trading.
A new fragmented world order can render some of today's infrastructure obselete, but it also calls for massive new investments across the globe, which requires a new set of strategic and tactical investment strategies.
Steen Jakobsen,
Chief Investment Officer
As globalisation turns to fragmentation, China seems set on playing a role in the global economy, while simultaneously working towards proofing its own economic situation from external shocks and crises.
Redmond Wong,
Market Strategist
The recent bank runs and ensuing challenges are reminicent of something we've seen before. Will it end like the S&L crises of 1986 and 1995?
Chris Dembik,
Head of Macroeconomic Research
Equity markets need to recalibrate to another - fragmented - global world. What's your view on equities in this market - are they going up or down?
Peter Garnry,
Head of Equity Strategy
With every development comes new opportunites, some of which could be in India. Have you considered the country as a part of your diversification strategy?
Charu Chanana,
Market Strategist
A collar is an option strategy that allows some protection while maintaining some upside potential. What investment would you like to use a collar strategy for?
Hans Oudshoorn,
Trainer Academy
There are arguments to be made for many commodities to have upside. Which are you paying the most attention to this quarter?
Ole S. Hansen,
Head of Commodity Strategy
In a very challenging macro environment, which currencies do you think will come out on top?
John J. Hardy,
Head of FX Strategy
