USD/CAD Live Chart

The USD/CAD pair is an interesting pair because it represents two economies that are massively intertwined. This is probably more so true for the Canadian economy relying on the American one than the other way around, as the Canadians send 85% of their exports to the United States. On the other hand, the Americans rely on Canada for quite a bit of energy, and raw materials. It is because of this that the USD/CAD pair typically is influenced by petroleum markets. However, this is a dynamic that is starting to fade a bit as the US now drills more and more petroleum and natural gas.

Ultimately though, the Canadian dollar itself is used as a proxy for crude oil. When Forex traders wish to play the oil markets via currencies, the Canadian dollar is always one of the first currencies that gets moved. There are a few other petroleum-based currencies, but Canada is by far the most liquid market to express your opinion. On top of that, you have to keep in mind that barrels of oil are based in US dollars, and as a result it makes sense that this currency pair moves the most. Think of it this way: when oil markets move, it will take either more or less US dollars to buy a barrel of oil. If it takes more US dollars to buy in that barrel of oil, that means the value the US dollar falls, so by proxy the Canadian dollar will often move higher and vice versa.

USD/CAD Live Chart:



 

Average Spread on the USD/CAD

The spread in this pair is relatively tight, typically around the three pips level. Because of this, it is a market that can be traded by most people, and on all time frames. It is a market that you can use to trade short-term charts against the oil market, but the one thing you need to keep in mind is that most of the liquidity is based in North America. Because of this, it is typically a pair that doesn’t move much during the Asian markets, and only mildly so during the European markets. Because of this, you will see most of the women coming out of the United States itself, so when there is a US holiday, this pair almost stands still. There is simply not enough liquidity coming out of Canada to move the markets much.

News Events that Affect the USD/CAD

There are several different economic announcements they can move this pair, such as the usual interest-rate decisions out of both the Federal Reserve and the Bank of Canada. Employment numbers out of both countries of course can move the markets, such as in other markets. GDP numbers out of both countries can move the market as well, but there is one particular difference in this market as far as announcements are concerned, as the petroleum markets are such a heavy influence at times. Crude Oil Inventories coming out of the United States can also move this market as he can show whether or not the United States is burning petroleum at a rapid pace, which in turn can suggest that there will be heavier demand for crude oil. If that’s the case, then it stands to reason that the Canadians will send more crude oil down to the United States causing a demand for the Canadian dollar as drillers will want to be paid in their local currency.

Because of the tight spread, newer traders tend like this pair but those new traders tend to be confined to North America as the liquidity only allows scalping this market during that timeframe. That is part of what keeps this particular market off the radar of European traders, as well as Asian ones. It’s not that they don’t trade this market, they just don’t tend to put a lot of money into this pair unless it’s more of a long-term play of the oil markets.

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