USD/CAD
“Loonie”US Dollar / Canadian Dollar
USD/CAD ('Loonie') combines the BoC–Fed policy gap with crude-oil prices and deep US–Canada trade links.
USD/CAD is the exchange rate between the US and Canadian dollars. The Canadian dollar is nicknamed the 'loonie' after the bird on its coin. Because Canada and the US are deeply integrated trading partners, the two economies move together, and USD/CAD is often a relatively range-bound major punctuated by commodity and policy shocks.
Crude oil is the wildcard: Canada is a major energy exporter, so rising oil prices tend to strengthen the loonie (pushing USD/CAD down), while falling oil weakens it. Layered on top is the gap between Bank of Canada and Federal Reserve policy.
What moves USD/CAD
- Crude-oil prices
Higher oil improves Canada's terms of trade and tends to strengthen CAD, lowering USD/CAD.
- BoC vs Fed policy
The expected overnight-rate vs federal-funds gap sets the carry.
- US growth & data
Canada's largest trading partner; US surprises spill into CAD.
- Broad dollar moves
US-led dollar trends move the numerator.
Trading sessions
Most active during the New York session, when US and Canadian data and oil markets are open.
Volatility
Moderate, with sharper moves around oil-price swings, BoC and FOMC decisions, and US/Canada employment data.
Central banks behind this pair
USD/CAD FAQ
- Why does oil move USD/CAD?
- Canada is a major crude exporter, so higher oil prices strengthen the Canadian dollar and tend to push USD/CAD lower, and vice versa.
- What is the 'loonie'?
- It is the nickname for the Canadian dollar, after the loon depicted on the one-dollar coin.
- What drives USD/CAD besides oil?
- The Bank of Canada–Fed policy gap, relative US–Canada growth, and broad dollar trends.
Related currency pairs
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