The USD/CAD currency pair witnesses considerable movement of funds in both directions. In 2016, around U.S. $881 million made its way from the United States to Canada in the form of remittances. Around U.S. $655 million was sent from Canada to the U.S. in the same year. These numbers do not account for trade related transactions.
Nicknamed the Loonie, the USD/CAD pair is among the seven major currency pairs. Its average daily volume stands at around U.S. $275 billion. Given the large volumes of trade this currency pair experiences, it is looked upon as fairly liquid.
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The U.S. Dollar
The United States adopted the dollar in its current form as its official currency in 1792. The U.S. dollar is also used as legal tender in two British Overseas Territories, the Caribbean, Ecuador, El Salvador, the Federated States of Micronesia, and Turks and Caicos Islands. Its use alongside other currencies is also common in places such as Belize, Costa Rica, Haiti, Liberia, Myanmar, and Panama.
Estimates suggest that around U.S. $5.1 trillion is traded in the forex market every day. In April 2016, the global forex market turnover share of the U.S. dollar stood in excess of 87%. It is the world’s most preferred reserve currency and also the most traded currency internationally.
|Nicknames||Buck, moolah, paper, dough, dead presidents, |
bones, greenback, green
|Bank notes||$1, $2, $5, $10, $20, $50, $100|
|Coins||1c, 5c, 10c, 25c, 50c, $1|
The Canadian Dollar
The Canadian dollar has been used as the official currency of Canada since 1858. It is also used unofficially in Saint Pierre and Miquelon, alongside the euro. The Canadian one-dollar coin comes with an image of a loon, which is why the currency in nicknamed Loonie in the forex market.
The Canadian dollar was the sixth most traded currency in the world in April 2016, accounting for more than 5% of the global forex market turnover share. It is often regarded as a commodity currency because its value depends on the large amount of oil and other natural resources that Canada exports.
|Currency symbol||$, C$|
|Nicknames||Loonie, huard in French|
|Bank notes||$5, $10, $20, $50, $100|
|Coins||1c, 5c, 10c, 25c, 50c, $1, $2|
U.S. Dollar / Canadian Dollar Historical Rates
Being close neighbors, the U.S. and Canada have maintained relatively healthy trade and political ties, which is why the Canadian dollar has largely reflected movements of the U.S. dollar, rising and falling against other international currencies at the same time.
However, the Canadian dollar has increased in value against the U.S. dollar and other currencies consistently since around 2002. This is mainly because Canada remains a major exporter of oil and the volatility of the Canadian dollar as a petrocurrency has matched the volatile global oil prices.
After the Great recession and the U.S. Federal Reserve’s quantitative easing measures that followed, the Canadian dollar made significant gains against the U.S. dollar, eventually getting to the 0.95 mark. In 2016, when oil prices crashed to trade at less than $30 per barrel, the Canadian dollar dropped to a record low, when one Canadian dollar valued at U.S. $1.46.
The USD/CAD currency pairs tend to have a negative correlation with the GBP/USD, AUD/USD, and NZD/USD pairs because the U.S. dollar in these cases is used as the base currency.
USD/CAD in the last five years
|U.S. $1 =|
|1 July, 2013||C$1.0298|
|1 July, 2014||C$1.0992|
|1 July, 2015||C$1.2682|
|1 July, 2016||C$1.3075|
|1 July, 2017||C$1.2964|
USD/CAD in the last five months
|U.S. $1 =|
|1 March, 2018||C$1.2801|
|1 April, 2018||C$1.2889|
|1 May, 2018||C$1.1298|
|1 June, 2018||C$1.2983|
|1 July, 2018||C$1.3148|
What Affects USD/CAD Rates?
The interest rate differential between the Bank of Canada and the U.S. Federal Reserve tends the affect the value of both currencies against each other. Since the Canadian economy is heavily reliant on the export of oil, oil prices tend to dictate the value of the Canadian dollar. When oil prices drop, the Canadian dollar tends to weaken against the U.S. dollar.
Other factors that have an effect on the USD/CAD currency pair include trade balance of both countries, as well as their industrial and gross domestic production.
Paying attention to exchange rates is important if you plan to move money between the U.S. and Canada, especially if you want to transfer a large sum. Since there are several overseas money transfer companies from which to choose, it is important that you compare your options well.