Trading USD/CAD
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The USD/CAD represents one of the most traded currency pairs in the world due to the large volume of cross-border trading between the US and Canada. The USD/CAD also belongs to the major forex group as it contains the influential US Dollar, while the Canadian Dollar is considered a commodity currency. Importantly, the pair offers rich volatility, liquidity, and tight spreads that attract online traders from all over.
Read on to learn about the history of the USD/CAD, its benefits and drawbacks, trading strategies and technical analysis, suitable investing times, and more. We also list the best brokers for trading USD/CAD below.
USD/CAD Trading Brokers
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1FOREX.comActive Trader Program With A 15% Reduction In Costs
Ratings
$1000.01 Lots1:50NFA, CFTCForex, Stocks, Futures, Futures OptionsMT4, MT5, TradingView, eSignal, AutoChartist, TradingCentralWire Transfer, Credit Card, Debit Card, Visa, Mastercard, Skrill, Neteller, ACH TransferUSD, EUR, GBP, CAD, AUD, JPY, CHF, PLN -
2NinjaTrader
Ratings
$00.01 Lots1:50NFA, CFTCForex, Stocks, Options, Commodities, Futures, CryptoNinjaTrader Desktop, Web & Mobile, eSignalACH Transfer, Debit Card, Wire TransferUSD -
3OANDA USCFDs are not available to residents in the United States.
Ratings
$00.01 Lots1:50NFA, CFTCForex, Crypto with Paxos (Cryptocurrencies are offered through Paxos. Paxos is a separate legal entity from OANDA)OANDA Trade, MT4, TradingView, AutoChartistWire Transfer, Visa, Mastercard, Debit Card, ACH TransferUSD, EUR, GBP, CAD, AUD, JPY, CHF, HKD, SGD -
4IGForex trading involves risk. Losses can exceed deposits.
Ratings
$00.01 Lots1:30 (Retail), 1:250 (Pro)FCA, ASIC, NFA, CFTC, DFSA, BaFin, MAS, FSCA, FINMA, CONSOBCFDs, Forex, Stocks, Indices, Commodities, ETFs, Futures, Options, Crypto, Spread BettingWeb, ProRealTime, L2 Dealer, MT4, AutoChartist, TradingCentralPayPal, Wire Transfer, Mastercard, Credit Card, Visa, Debit CardUSD, EUR, GBP, CAD, AUD, JPY, ZAR, SEK, DKK, CHF, HKD, SGD -
5Interactive Brokers
Ratings
$0$1001:50FCA, SEC, FINRA, CFTC, CBI, CIRO, SFC, MAS, MNB, FINMAStocks, Options, Futures, Forex, Funds, Bonds, ETFs, Mutual Funds, CFDs, CryptocurrenciesTrader Workstation (TWS), IBKR Desktop, GlobalTrader, Mobile, Client Portal, AlgoTrader, OmniTrader, eSignal, TradingCentralCheque, ACH Transfer, Wire Transfer, Automated Customer Account Transfer Service, TransferWise, Debit CardUSD, EUR, GBP, CAD, AUD, INR, JPY, SEK, NOK, DKK, CHF, AED, HUF -
6Videforex20% to 200% Deposit Bonus
$250$0.011:500Binary Options, CFDs, Forex, Indices, Commodities, CryptoTradingViewSkrill, Perfect Money, Bitcoin Payments, Neteller, Credit Card, Visa, Mastercard, Ethereum PaymentsUSD, EUR, GBP, AUD, RUB -
7CloseOption$10 Welcome Gift
$5$1National Bank of GeorgiaBinary Options on Forex & CryptosOwnPayPal, WebMoney, Mastercard, Perfect Money, Wire Transfer, Bitcoin Payments, Ethereum PaymentsUSD -
8InstaTrade
Ratings
$10.011:1000BVI FSCFISP, CFDs, Forex, Stocks, Indices, Commodities, Cryptos, FuturesInstaTrade Gear, MT4Visa, Mastercard, Wire Transfer, Credit Card, Debit Card, Bitcoin Payments, Ethereum PaymentsUSD, EUR, RUB -
9Axofa10% Deposit Bonus
$10.01 Lots1:1000SVGFSAForex, CFDs, Stocks, Indices, CommoditiesMT5Debit Card, Credit Card, Visa, Mastercard, Neteller, Skrill, Bitcoin Payments, Wire TransferUSD, IDR -
10Coinexx100% Deposit Welcome Bonus
0.001 BTC0.01 Lots1:500Forex, Commodities, Indices, CryptocurrenciesMT4, MT5Bitcoin Payments, Ethereum PaymentsUSD
Here is a short overview of each broker's pros and cons
- FOREX.com - FOREX.com continues to uphold its stature as a premier FX broker, offering over 80 currency pairs and boasting some of the most competitive fees in the industry. With EUR/USD spreads dipping as low as 0.0 and $5 commission per $100k, it stands out. Moreover, its SMART Signals help to identify price behaviors across numerous major currency markets.
- NinjaTrader - NinjaTraders supports the trading of popular currencies including the EUR/USD. The software also offers advanced features to streamline the trading experience, including complex order types like market if touched (MIT) and one cancels other (OCO).
- OANDA US - OANDA offers a diverse selection of 68 currency pairs, more than many alternatives. The broker’s in-house platform offers superb day trading capabilities via powerful TradingView charts, including 65+ technical indicators and 11 customizable chart types.
- IG - IG offers an above-average suite of 80+ currency pairs on its proprietary web platform, mobile app or MetaTrader 4, with more advanced charts and forex analysis tools available on the ProRealTime software. Forex spreads are competitive based on tests, starting from 0.1 pips on majors like the EUR/USD.
- Interactive Brokers - IBKR presents an extensive range of over 100 major, minor, and exotic forex pairs, surpassing the offerings of nearly all leading alternatives, though not CMC Markets. Forex trading occurs over multiple platforms and boasts institutional-grade spreads starting from 0.1 pips and 20 complex order types, including brackets, scale, and one-cancels-all (OCA) orders.
- Videforex - Trade 35 major, minor and exotic forex pairs through CFDs with floating spreads from 0.1 pips. Alternatively, binary options allow you to speculate on rising and falling prices with a fixed stake and payout.
- CloseOption - CloseOption offers binaries on 25+ forex pairs, including majors like EUR/USD and a few minors like AUD/JPY. Payouts vary by currency, with decent typical payouts of 75% for GBP/USD.
- InstaTrade - InstaTrade offers a huge selection of around 100 currency pairs. It provides spreads starting at 0.0 on majors, plus integrated forex analysis in the web platform, featuring signals, plus technical and fundamental summaries. Additionally, InstaTrade offers educational modules covering forex basics for beginners, including margin trading and risk management.
- Axofa - Axofa offers a decent range of 50+ forex pairs with raw spreads from 0.0 pips. Very high leverage up to 1:1000 and commission-free forex trading is available. With that said, the broker is not particularly transparent when it comes to account conditions and fees.
- Coinexx - Trade 70 major, minor and exotic forex pairs with ultra-low ECN spreads and fast execution via the MT4 or MT5 platforms. There are also zero SL/TP limits and automated forex trading is well catered for.
Trading USD/CAD Comparison
FOREX.com
"FOREX.com remains a best-in-class brokerage for active forex traders of all experience levels, with over 80 currency pairs, tight spreads from 0.0 pips and low commissions. The powerful charting platforms collectively offer over 100 technical indicators, as well as extensive research tools."
Christian Harris, Reviewer
FOREX.com Quick Facts
Bonus Offer | Active Trader Program With A 15% Reduction In Costs |
---|---|
GBPUSD Spread | 1.3 |
EURUSD Spread | 1.2 |
EURGBP Spread | 1.4 |
Total Assets | 80+ |
Leverage | 1:50 |
Platforms | MT4, MT5, TradingView, eSignal, AutoChartist, TradingCentral |
Account Currencies | USD, EUR, GBP, CAD, AUD, JPY, CHF, PLN |
Pros
- FOREX.com offers industry-leading forex pricing starting from 0.0 pips, alongside competitive cashback rebates of up to 15% for serious day traders.
- With over 20 years of experience, excellent regulatory oversight, and multiple accolades including runner-up in our 'Best Forex Broker' awards, FOREX.com boasts a global reputation as a trusted brokerage.
- The in-house Web Trader continues to shine as one of the best-designed platforms for aspiring day traders with a slick design and over 80 technical indicators for market analysis.
Cons
- Despite increasing its range of instruments, FOREX.com's product portfolio is still limited to forex and CFDs, so there are no options to invest in real stocks, real ETFs or real cryptocurrencies.
- FOREX.com's MT4 platform offers approximately 600 instruments, significantly fewer than the over 5,500 available on its non-MetaTrader platforms.
- Funding options are limited compared to leading alternatives like IC Markets and don’t include many popular e-wallets, notably UnionPay and POLi.
NinjaTrader
"NinjaTrader continues to meet the demands of active futures traders looking for low fees and premium analysis tools. The platform hosts top-rate charting features including hundreds of indicators and 10+ chart types."
Tobias Robinson, Reviewer
NinjaTrader Quick Facts
GBPUSD Spread | 1.6 |
---|---|
EURUSD Spread | 1.3 |
EURGBP Spread | 1.6 |
Total Assets | 50+ |
Leverage | 1:50 |
Platforms | NinjaTrader Desktop, Web & Mobile, eSignal |
Account Currencies | USD |
Pros
- Traders can get free platform access and trade simulation capabilities in the unlimited demo
- You can get thousands of add-ons and applications from developers in 150+ countries
- Low fees are offered, with $50 day trading margins & commissions from $.09 per micro contract
Cons
- Non forex and futures trading requires signing up with partner brokers
- The premium platform tools come with an extra charge
- There is a withdrawal fee on some funding methods
OANDA US
"OANDA remains an excellent broker for US day traders seeking a user-friendly platform with premium analysis tools and a straightforward joining process. OANDA is also heavily regulated with a very high trust score."
Jemma Grist, Reviewer
OANDA US Quick Facts
GBPUSD Spread | 3.4 |
---|---|
EURUSD Spread | 1.6 |
EURGBP Spread | 1.7 |
Total Assets | 65+ |
Leverage | 1:50 |
Platforms | OANDA Trade, MT4, TradingView, AutoChartist |
Account Currencies | USD, EUR, GBP, CAD, AUD, JPY, CHF, HKD, SGD |
Pros
- The broker's API facilitates access to 25 years of deep historical data and rates from 200+ currencies
- Day traders can enjoy fast and reliable order execution
- Beginners can get started easily with $0 minimum initial deposit
Cons
- There's only a small range of payment methods available, with no e-wallets supported
- It's a shame that customer support is not available on weekends
- The range of day trading markets is limited to forex and cryptos only
IG
"IG continues to provide a comprehensive package with an intuitive web platform and best-in-class education for beginners, plus advanced charting tools, real-time data, and fast execution speeds for experienced day traders."
Christian Harris, Reviewer
IG Quick Facts
GBPUSD Spread | 0.9 |
---|---|
EURUSD Spread | 0.8 |
EURGBP Spread | 0.9 |
Total Assets | 80+ |
Leverage | 1:30 (Retail), 1:250 (Pro) |
Platforms | Web, ProRealTime, L2 Dealer, MT4, AutoChartist, TradingCentral |
Account Currencies | USD, EUR, GBP, CAD, AUD, JPY, ZAR, SEK, DKK, CHF, HKD, SGD |
Pros
- The ProRealTime advanced charting platform is free as long as certain modest monthly trading activity requirements are met
- IG offers an extensive collection of professional and engaging educational resources, including webinars, articles, and analysis
- IG is amongst the best in terms of its range of instruments, which includes stocks, forex, indices, commodities, and cryptocurrencies, providing ample diversification opportunities
Cons
- Stock and CFD spreads still trail the cheapest brokers like CMC Markets based on tests
- IG has discontinued its swap-free account, reducing its appeal to Islamic traders
- Beginners might find IG’s fee structure complex, with various fees for different types of trades or services, potentially leading to confusion or unexpected charges
Interactive Brokers
"Interactive Brokers is one of the best brokers for advanced day traders, providing powerful charting platforms, real-time data, and customizable layouts, notably through the new IBKR Desktop application. Its superb pricing and advanced order options also make it highly attractive for day traders, while its diverse range of equities is still among the best in the industry."
Christian Harris, Reviewer
Interactive Brokers Quick Facts
GBPUSD Spread | 0.08-0.20 bps x trade value |
---|---|
EURUSD Spread | 0.08-0.20 bps x trade value |
EURGBP Spread | 0.08-0.20 bps x trade value |
Total Assets | 100+ |
Leverage | 1:50 |
Platforms | Trader Workstation (TWS), IBKR Desktop, GlobalTrader, Mobile, Client Portal, AlgoTrader, OmniTrader, eSignal, TradingCentral |
Account Currencies | USD, EUR, GBP, CAD, AUD, INR, JPY, SEK, NOK, DKK, CHF, AED, HUF |
Pros
- While primarily geared towards experienced traders, IBKR has made moves to broaden its appeal in recent years, reducing its minimum deposit from $10,000 to $0.
- With low commissions, tight spreads and a transparent fee structure, IBKR delivers a cost-effective environment for short-term traders.
- The new IBKR Desktop platform takes the best of TWS while adding bespoke tools like Option Lattice and Screeners with MultiSort to create a genuinely impressive trading experience for day traders at every level.
Cons
- You can only have one active session per account, so you can’t have your desktop program and mobile app running simultaneously, making for a sometimes frustrating trading experience.
- TWS’s learning curve is steep, and beginners may find it challenging to navigate the platform and understand all the features. Plus500's web platform is much better suited to new traders.
- IBKR provides a wide range of research tools, but their distribution across trading platforms and the web-based 'Account Management' page lacks consistency, leading to a confusing user experience.
Videforex
"Newer traders will find a lot to enjoy about trading binary options on Videforex's easy-to-use proprietary platform, as well as the broker's copy trading solution. Payouts also remain higher than most alternatives climbing to 98%."
William Berg, Reviewer
Videforex Quick Facts
Bonus Offer | 20% to 200% Deposit Bonus |
---|---|
GBPUSD Spread | Floating from 0.1 pips |
EURUSD Spread | Floating from 0.1 pips |
EURGBP Spread | Floating from 0.1 pips |
Total Assets | 35 |
Leverage | 1:500 |
Platforms | TradingView |
Account Currencies | USD, EUR, GBP, AUD, RUB |
Pros
- Videforex allows you to enter positions with just ¢0.01
- Videforex regularly runs trading contests, offering great practice opportunities and cash prizes to beginners and experienced traders
- The firm facilitates both day trading and binary options which is great for those looking to diversify their portfolios
Cons
- No MetaTrader 4 integration
- US clients aren’t accepted due to legal restrictions
- The broker isn’t overseen by a trusted regulatory agency
CloseOption
"CloseOption is a good pick for traders seeking a user-friendly binary options platform with high payouts and joining bonuses."
Tobias Robinson, Reviewer
CloseOption Quick Facts
Bonus Offer | $10 Welcome Gift |
---|---|
GBPUSD Spread | No fee - payouts approx. 80% (Copper) |
EURUSD Spread | No fee - payouts approx. 80% (Copper) |
EURGBP Spread | No fee - payouts approx. 80% (Copper) |
Total Assets | 20+ |
Platforms | Own |
Account Currencies | USD |
Pros
- Multiple global payment methods are available
- Free demo account
- The user-friendly platform is compatible with most web browsers
Cons
- CloseOption is not regulated by a well-regarded trading authority
- Binary options are only available on fiat and digital currencies
- Clients need to deposit $50,000+ to qualify for the best payouts
InstaTrade
"Although InstaTrade offers active trading on a comprehensive platform, it stands out with its fairly unique Fixed Income Structured Product (FISP), providing passive investment opportunities with up to 50% returns in 6 months if conditions are met. "
Christian Harris, Reviewer
InstaTrade Quick Facts
GBPUSD Spread | 0.2 |
---|---|
EURUSD Spread | 0.0 |
EURGBP Spread | 2.8 |
Total Assets | 65 |
Leverage | 1:1000 |
Platforms | InstaTrade Gear, MT4 |
Account Currencies | USD, EUR, RUB |
Pros
- InstaTrade TV, consisting of video interviews and valuable market insights spanning equities, cryptos and more, helps identify opportunities and inform short-term trades.
- Despite an average investment offering of around 300 assets, InstaTrade offers a particularly strong suite of currency pairs, catering to advanced traders seeking opportunities in volatile exotics.
- InstaTrade claims to "guarantee" returns through the structured element of its passive trading solution (FISP), with applications approved within 24 hours.
Cons
- InstaTrade’s growing educational tools provide valuable information for aspiring traders, but still trail category leaders like eToro with no structured course based on experience level.
- InstaTrade is registered in the offshore jurisdiction of the British Virgin Islands, resulting in limited regulatory safeguards for retail investors.
- InstaTrade sports one of the most cluttered websites and client cabinets in the industry, potentially overwhelming new traders, especially compared to XTB’s intuitive trading journey and resources.
Axofa
"Axofa could be a good option for clients looking for social trading features alongside the MT5 platform. The low entry requirements and ECN spreads are particularly promising, but the lack of transparency and respected regulatory oversight raises security concerns."
William Berg, Reviewer
Axofa Quick Facts
Bonus Offer | 10% Deposit Bonus |
---|---|
GBPUSD Spread | From 1.6 pips |
EURUSD Spread | From 1.6 pips |
EURGBP Spread | From 1.6 pips |
Total Assets | 10+ |
Leverage | 1:1000 |
Platforms | MT5 |
Account Currencies | USD, IDR |
Pros
- The broker offers a range of local payment methods, especially for clients in Asia, as well as crypto deposits
- Axofa offers the MetaTrader 5 platform which will particularly serve intermediate to experienced traders looking for advanced charting tools
- There's a proprietary social/copy trading service for beginners looking to follow successful strategies and for experienced traders looking to sell their strategies
Cons
- Our team found inconsistencies between international subsidiaries and website information
- The offshore operations and lack of any regulatory oversight is a major concern
- There is a lack of transparency around pricing and account conditions, which significantly reduces the trust score
Coinexx
"Traders seeking highly leveraged CFDs with a broker that uses crypto as a base account currency will find a good match in Coinexx. The ECN model also offer tight spreads from 0 pips. On the downside, traders should note the weak regulatory oversight."
Tobias Robinson, Reviewer
Coinexx Quick Facts
Bonus Offer | 100% Deposit Welcome Bonus |
---|---|
GBPUSD Spread | From 0.0 pips |
EURUSD Spread | From 0.0 pips |
EURGBP Spread | From 0.0 pips |
Total Assets | 60+ |
Leverage | 1:500 |
Platforms | MT4, MT5 |
Account Currencies | USD |
Pros
- 100% deposit bonus for new clients
- Free VPS for active traders
- MetaTrader 4 and MetaTrader 5 integration
Cons
- Limited educational materials for new traders
- No copy trading service for aspiring investors
- No fiat account funding options - crypto only
Why Trade USDCAD?
The USD/CAD currency pair is the fifth most traded forex pair in the world. With that in mind, it’s probably no surprise that it’s often highlighted on popular trading platforms and exchanges. But why should you invest in USD/CAD?
- Prevalence – It is one of the most traded pairs in the FX market, representing a significant quota of daily trade. The US Dollar is also the world’s leading reserve currency.
- Volatility – As the pair is widely traded, it leads to high volatility, thus, providing tight spreads. This ensures plenty of opportunities to make trades and profit from price fluctuations.
- Resources – With the number of tools available nowadays, short and long-term forecasts are easier to make. Live candlestick charts, for example, help you access real-time and historical graphs with customizable indicators and pivot points. Furthermore, multiple websites give you access to investing forums with ratings on trader sentiment and market outlook. These forums are often full of weekly projections and predictions for today based on multiple data points.
- Exclusivity – The USD/CAD has unique qualities. As neighboring countries, its economies run in parallel, taking away uncertainties from overseeing distant economies. Major economic news is also released on the same day, and both currencies also run under the same North American trading session.
Drawbacks
- Volatility – While high levels of volatility can result in winning positions, it can also quickly lead to large losses. Another key factor affecting USD/CAD volatility is major economic news on US non-farm payroll and Canada’s employment reports, released on the same day. This can make the forex pair incompatible with scalping strategies.
- Leverage – Similar to stock trading, leverage can increase profits, but it can also magnify losses. Because of the pair’s volatility, utilizing leverage can be unpredictable. Thus, forecasting ahead to next week or later into 2024 is essential for risk management.
- Automated competition – You can access attractive bid-ask spreads, competitive USD/CAD futures, and ETFs. However, competition nowadays is fierce. Most traders have to compete against sophisticated trading algorithms. Even if you manually analyze and react to the market, you are competing with bots that enter and exit positions immediately when pre-determined criteria have been met.
Live Chart
Influences On Movement
There is a multitude of factors to consider in the USD/CAD relationship. However, the following are key to influencing the currency pair’s conversion rate:
United States Influence
- Balance of trade and investment – Analysts often cite this as the most important influence on the value of the Dollar. The balance of trades represents the difference between what the US exports and imports. A trade deficit can affect the Dollar foreign investor sentiment. On the other hand, if the US imports more than it exports, foreign investors will try to offset the difference by buying Dollar-denominated assets.
- Politics – Political affairs can impact the strength of the US economy, so it is important to keep an eye on the latest news and updates. If financial policies are unstable, investors may lose faith in the economy and resist buying the USD. Confidence in the US presidency, government administration, and congress can also cause investors to flock. Further, tax cuts can fuel consumer spending, improving the economy. On the other hand, tax increases can also lessen budget deficits.
- Economy – A strong economy will raise the confidence of investors. It is helpful to look out for America’s industry and economic indicators. Factors like manufacturing growth, level of outsourcing, employment growth, and wage data can affect the value of the US Dollar.
- Interest rates – Naturally, investors want to capitalize on higher interest rates. Thus, the decisions made by the Federal Reserve Bank are important to monetary policy, which significantly affect the value of the Dollar. These reports can provide an idea of where the currency is headed in the future.
Canadian Influence
- International trade – When exports exceed imports, it puts upward pressure on the exchange rate. On the other hand, a trade deficit will put downward pressure on the Canadian Dollar.
- Interest rates – Similarly to the USD, higher interest rates in Canada will attract investment. Notably, the decisions to raise or lower interest rates made by the Bank of Canada today can affect the future performance of the CAD.
- Commodity prices – As a commodity currency, it is no surprise that the value of the Canadian Dollar strongly correlates to the world’s live commodity prices. Commodities represent a large share of exports in Canada. Thus when the price of oil rises, its goods become more valuable. With an increase in purchasing power, this movement will be reflected in a higher exchange rate.
Currency Correlations
What may not be clear when trading on your USD/CAD live chart is the effect of currency correlations. No single pair trades completely independent of other currencies. These relationships varying by dates are known as positive and negative correlations:
- Positive correlation – This means that pairs move in the same direction. For example, popular pairs, GBP/USD, AUD/USD, and EUR/USD, are all positively correlated. This is an outcome of the US Dollar being the counter currency. Any changes to the US Dollar will affect all pairs.
- Negative correlation – When currency pairs move in opposite directions, they are negatively correlated. Popular pairs include USD/CHF, USD/JPY, and USD/CAD. This is a result of the US Dollar being the base currency. Negatively correlated currencies will suit hedging trading strategies.
Application
A USD/CAD trader can use this information to better understand the consequences of movement in certain pairs. But it is important to note that correlations do not always remain stable. For example, USD/CAD had a strong positive correlation with a coefficient of 0.95. However, the relationship deteriorated down to 0.28. Many factors can affect this, such as economic impacts or decisions made by the Fed or BoC.
USD/CAD Trading Strategy
To trade USD/CAD effectively, it takes more than just analyzing signals and keeping up with the latest news and pre-market sentiment. It also takes more than using pip values to your advantage. Below are some useful options and considerations.
Timing
When day trading in the forex space, timing is everything. FX trading may be available 24/7, but it doesn’t mean you should buy and sell all day. Instead, you want to trade when the USD/CAD pair is active, with plenty of volume and volatility. The danger is if you trade at the wrong times, the cost of spreads and commissions can cancel out profits.
Trading sessions in Canada and the US coincide, which means longer trading sessions, but it can also mean more profit. Of course, higher trading volumes also make USD/CAD a lot riskier to trade with.
Ideal Window
So, when is the best time to day trade USD/CAD? The ideal time is arguably from 08:00 to 17:00 EST, which is the entire North American trading session. During this nine-hour window, trading volumes are at their peak, and you have better leverage.
Interestingly, the pair also sees its greatest daily volatility on a Friday, which can be due to traders adjusting positions ahead of the weekend. Spreads are normally tightest during this window, which can result in the greatest opportunities to generate profits. During this window, forex forums are also active.
All these factors can result in the biggest profit potential. Therefore, you should make sure to check for intraday volatility and invest your trading capital during this time slot.
Buying & Selling USD/CAD
The USD/CAD has a tendency to make solid moves promptly, which follows a considerable period for consolidation. So, live charts and technical analysis will often be needed to succeed in trading this FX pair.
Trading the USD/CAD can be based on some simple technical strategies. For example, you can trade based on bounces from trend lines or support and resistance levels. This steady strategy can supply many small profits over a period of time. On the other hand, traders can opt for a more aggressive strategy that delivers large profits in a short period. This involves watching out for inevitable breakout moves from the pair.
The most intense trading sessions occur at the release of economic reports such as non-farm payrolls, unemployment rates, economic sentiment, manufacturing, and non-manufacturing activity growth. Thus, trading during these events without the help of technical analysis can be done using a proactive, a reactive, or a mixed strategy. Proactive trading involves entering a position ahead of the release of today’s data, for example, and basing your decision on forecasts. A reactive approach involves entering the market after the data is published. Finally, a mixed approach combines the two.
News
The latest market news updates on the USD/CAD currency pair can quickly impact market sentiment and create price shifts. You can capitalize on the right moments, but only if you understand how the markets reacted historically.
Since this pair is significantly affected by the oil sector, you should be aware of OPEC meetings that involve oil-selling countries like Canada and the USA. These deliberations can help you forecast which currency will have bigger demand in the future. You should also keep an eye on the decisions made by the Fed and BoC. As mentioned before, these two banks make important decisions on interest rates and monetary policy, which have a large effect on the value of the USD and CAD.
Make sure to keep on top of the latest news updates, along with daily, weekly and monthly forecasts. Utilize technical analysis on live charts, the latest spot exchange rate, plus forecasts and forums. The following are some popular resources:
- XE calculates real-time daily exchange rates and quotes
- TradingView provides charting tools, market news, and real-time information on currency conversions
- IG is a leading forex trading platform with excellent tools alongside 5-year, 10-year, and 20-year charts
History
Before you start live chart investing, it is helpful to have an understanding of the USD/CAD history:
Early History
The US Dollar was created during The Coinage Act of 1792, when the United States Congress appointed it as the country’s currency. Paper banknotes were introduced into circulation in the mid-1800s. In 1913, the Federal Reserve Act created the central bank of the US. The USD is still regarded as the world’s unofficial reserve currency after the introduction of the Bretton Woods monetary system in 1944.
On the other hand, in the early 1850s, Canada departed from the colonial pound sterling and shifted to the Canadian Dollar. Until 1970, the CAD was attached to the USD, but it is currently a free-floating currency controlled by the Bank of Canada. It’s also nicknamed as the ‘loonie’, derived from the loon bird that appears on Canadian Dollar coins.
Recent History
Historical exchange rates of the USD/CAD were affected by key events. The Canadian Dollar reached parity with the US Dollar on September 20, 2007. It had been the first time in close to 31 years. Other points of USD/CAD parity were after the Great Recession when the Federal Reserve had subsequent quantitive easing. The Canadian and US Dollar eventually reached a parity of 0.95.
In fact, most instances of parity were related to periods of financial difficulty in the US or during high oil prices. For example, in 2016, the price of oil slumped to a low, trading at less than $30 per barrel. During this time, the Canadian Dollar hit a record low of 1.46 CDN to the USD.
The US to CAD FX rate between 2008 to 2018 has been anywhere between 0.94 and 1.46. The two have been relatively close in value over the decade. From 2011 to 2012, the CAD was worth more than the USD. This was when the USD/CAD exchange rate briefly dipped below 1.00. Since then, the US Dollar has shown a steady increase in value against the Canadian Dollar, particularly in mid-2015. The US Dollar was also in a general uptrend against most other major currencies during this time.
Note, the USD/CAD reached an all-time high of 1.62 in January of 2002; and an all-time low of 0.92 in November 2007.
Role Of The USD
After understanding key events in the USD/CAD timeline, it is important to grasp the role of the US Dollar to make future rate predictions.
The United States is the world’s largest economic power, representing almost 25% of the global nominal GDP. The country’s economy is primarily service-oriented, with 80% of its GDP coming from sectors like real estate, transportation, and financial services. Since the USD is the most traded currency in the world, it is affected by many factors. As already mentioned, key influences include the various reports issued by the Fed.
Other major economic indicators are:
- ISM Non-Manufacturing
- Consumer Price Index
- Producer Price Index
- ISM Manufacturing
- Trade Balance
Role Of The CAD
While you might focus your attention on the strength and role of the USD, it is equally useful to consider the role the CAD plays too.
Canada is the fourteenth biggest economy in the world. It closely resembles the United States with its market-oriented economic system, types of production, and high standard of living. Canada’s economy is typically known as a resource-based economy, as it mainly relies on the export of its natural resources such as wood, grain, minerals, and petroleum. Nonetheless, more than two-thirds of its GDP comes from its service sector.
Other major economic indicators are:
- Ivey Purchasing Managers’ Index
- Consumer Price Index
- Unemployment Rate
- Trade Balance
- Retail Sales
Importantly, the 1989 Free Trade Agreement between Canada and the US removed the majority of trading tariffs between the countries. The Bank of Canada is also a major influence on the Canadian Dollar as it enacts policies that promote economic and employment growth. Daily, weekly, monthly, and annual exchange rate charts are available on the BoC website.
Final Word On Trading USD/CAD
The USD/CAD currency pair promises volume, volatility, and tight spreads, which provide plenty of opportunity to yield profits. However, there are many factors to consider, like economic data releases, central bank statements, and the latest market news.
You must be ready to conduct your own expert analysis, utilize interactive daily, weekly and historical charts, trends, and news resources. Make sure to maximize the quality of your trades in the ideal window when the pair is most liquid. You can also invest via trusted OTC brokers such as Pepperstone and Oanda. If you follow the guidelines outlined on this page, you too can go in search of those rich forex profits.
FAQs
When Is The Best Time To Trade USD/CAD?
The USD/CAD market hours align with the North American trading session between 08:00 and 17:00 EST. This is when the FX pair is most liquid and volatile. Invest your trading capital during these times to improve the quality of trades.
How Much Is 1 USD In CAD?
The USD to CAD exchange rate is always shifting. See a live chart for the latest rate between the two popular currencies.
Is The USD Stronger Than The CAD?
The historical exchange rate of the two is always fluctuating, with both currencies being stronger than the other across various points. However, in the last few years, the US Dollar has maintained a superior position to that of the Canadian Dollar.
Can I E-Transfer USD To CAD?
There are many services available today that allow you to e-transfer USD to CAD and vice versa. For example, TD provides competitive exchange rates and ensures your transactions are processed safely and securely.
Should I Trade With USD/CAD?
When done effectively, the profit potential can be fruitful. This is because USD/CAD provides high volumes and tight spreads. It also features two key currencies, with the US Dollar being the world’s top reserve currency. Investors can make use of simple strategies like trading based on bounces from trend lines or from support and resistance levels. Alternatively, you can opt for more aggressive strategies that deliver large profits in a short space of time. A proactive, reactive, or mixed approach to the news can also prove prosperous during major economic releases.