How to Trade USD/CAD Currency Pair?
Author: Victor Gryazin
Dear Clients and Partners,
USD/CAD – US dollar vs Canadian dollar – is a major currency pair, popular in the Forex market. Let us see, what influences its quotations and what the main trading methods are.
Some history
Canada is a country with the largest territory in North America. The name of the country stands for “kanata”, which means “settlement, land” in the language of local Indian people. The history of Canada started in 1534 when a French seafarer Jacques Cartier explored the country. One of the first French colonies was founded on the territory of modern Quebec, initially populated by indigenous people.
Canada is a federative country that consists of ten provinces and three territories. As early as the 1850s, the country gave up the colonial Canadian pound and switched to the Canadian dollar. Traders also use a slang name “loony”, from “loon”, the name of the bird on the 1 dollar coin. This bird is a mascot o Canada. Since 1970, the CAD has been a free tradable currency; the monetary policy is regulated by the Bank of Canada, the Central Bank of the country.
The CAD is a popular currency that takes part in 3% of all trading operations of international trade. Many leading countries keep a part of their gold reserves in the CAD. Thanks to free conversion and good volatility, the CAD is one of the seven Forex majors.
Trading characteristics of USD/CAD
USD/CAD demonstrates the relation of the US dollar to the Canadian dollar. The quotation demonstrates how many Canadian dollars you will need to buy one Us dollar. The growth of USD/CAD means that the USD becomes stronger on the expense of the CAD. And when the USD/CAD falls, the CAD becomes stronger against the USD.
Here are several trading characteristics of the USD/CAD:
To trade the pair, you can use fundamental analysis, tech analysis, and indicators.
Fundamental analysis
This approach analyzes various fundamental factors: economic statistics, expectations of changes in the interest rate, or the current trend in global currency and commodity markets.
Example:
In 2020, when the stock market collapsed due to the pandemic, global oil prices were falling fast. At that time, two negative factors at once influenced the CAD: the US dollar was growing because investors were fleeting from risks, and oil prices were falling. As a result, the USD/CAD pair was growing fast; one could buy it and hold until its growth stopped with the end of the acute phase of the crisis and the beginning of economic recovery.
Closing thoughts
Thanks to good liquidity, volatility, and a small spread, USD/CAD is actively used by Forex traders. Trading decisions are based on various methods, including analysis of economic statistics, price charts, and indicator signals.
To get started, use a demo account so you could practice and only then switch to a real account with minimal risks.
Read more at R Blog - RoboForex
Sincerely,
RoboForex team
Author: Victor Gryazin
Dear Clients and Partners,
USD/CAD – US dollar vs Canadian dollar – is a major currency pair, popular in the Forex market. Let us see, what influences its quotations and what the main trading methods are.
Some history
Canada is a country with the largest territory in North America. The name of the country stands for “kanata”, which means “settlement, land” in the language of local Indian people. The history of Canada started in 1534 when a French seafarer Jacques Cartier explored the country. One of the first French colonies was founded on the territory of modern Quebec, initially populated by indigenous people.
Canada is a federative country that consists of ten provinces and three territories. As early as the 1850s, the country gave up the colonial Canadian pound and switched to the Canadian dollar. Traders also use a slang name “loony”, from “loon”, the name of the bird on the 1 dollar coin. This bird is a mascot o Canada. Since 1970, the CAD has been a free tradable currency; the monetary policy is regulated by the Bank of Canada, the Central Bank of the country.
The CAD is a popular currency that takes part in 3% of all trading operations of international trade. Many leading countries keep a part of their gold reserves in the CAD. Thanks to free conversion and good volatility, the CAD is one of the seven Forex majors.
Trading characteristics of USD/CAD
USD/CAD demonstrates the relation of the US dollar to the Canadian dollar. The quotation demonstrates how many Canadian dollars you will need to buy one Us dollar. The growth of USD/CAD means that the USD becomes stronger on the expense of the CAD. And when the USD/CAD falls, the CAD becomes stronger against the USD.
Here are several trading characteristics of the USD/CAD:
- Trading time: the pair trades 24/7 except weekends and holidays. Its trading volumes and volatility reach their peaks during the American trading session when important economic statistics from the USA and Canada is published, influencing the quotations of the pair.
- Volatility: USD/CAD is a quite volatile pair. Its average daily movements are about 80-100 points. Strong surges bring the volatility to 200-300 points a day for a short while.
- Spread: this pair is a major, popular and liquid enough for the spread to be small. On popular ECN accounts in normal market conditions it amounts to 1-1.5 points.
To trade the pair, you can use fundamental analysis, tech analysis, and indicators.
Fundamental analysis
This approach analyzes various fundamental factors: economic statistics, expectations of changes in the interest rate, or the current trend in global currency and commodity markets.
Example:
In 2020, when the stock market collapsed due to the pandemic, global oil prices were falling fast. At that time, two negative factors at once influenced the CAD: the US dollar was growing because investors were fleeting from risks, and oil prices were falling. As a result, the USD/CAD pair was growing fast; one could buy it and hold until its growth stopped with the end of the acute phase of the crisis and the beginning of economic recovery.
Closing thoughts
Thanks to good liquidity, volatility, and a small spread, USD/CAD is actively used by Forex traders. Trading decisions are based on various methods, including analysis of economic statistics, price charts, and indicator signals.
To get started, use a demo account so you could practice and only then switch to a real account with minimal risks.
Read more at R Blog - RoboForex
Sincerely,
RoboForex team