USD/CAD: two economies, one price
USD/CAD is the US dollar against the Canadian dollar, which means it is the Federal Reserve (Fed) against the Bank of Canada (BoC) and everything those two banks have to react to. Here is where each side stands and what moves it.
The two sides
US dollar
Federal Reserve (Fed)
- The Federal Reserve has two jobs at once, so both the inflation figure and the jobs report can take over in the same month.
- It is the currency the world borrows in, which is why it can rise on bad American news when markets turn cautious.
- Rate expectations move it more than the rate itself: what the market thinks the Fed will do next year is the price you are trading.
Canadian dollar
Bank of Canada (BoC)
- The price of oil, Canada's largest export.
- The United States. Most of what Canada sells goes there, so American growth and trade policy land on the Canadian dollar.
- The Bank of Canada, which tends to move in the same direction as the Federal Reserve but not always at the same pace.
Which of the two pays the higher rate, and what that gap is worth in points a year, is on the rate differentials page, and the releases due for either currency are on the calendar for this week.
How USD/CAD is scored
Each currency gets a score from 0 to 100 from four parts: risk sentiment, the fundamentals of its central bank and rate level, geopolitics and the price of the week. The score of the pair is USD minus CAD.
A wide gap means the macro is pulling one way. A narrow one means this pair has no macro behind it today, which is a good reason to look at another one. Members see the number, the reason and the event risk on it every morning.
Before you take it
- Check both sides. A release on either currency moves the pair, and the leg nobody checked is the one that hurts.
- Check the rate gap. It pays you every night you hold, or it costs you.
- Check your other positions. Two pairs that share a currency are one bet.
- Then take the entry from your own chart. Macro for the side, the chart for the moment.
Pairs that share a currency
Two positions that share a currency are one position wearing two names. These are the pairs that move with USD/CAD.
All 28 pairsQuestions about USD/CAD
What moves USD/CAD?
Two central banks against each other, the Federal Reserve (Fed) and the Bank of Canada (BoC), the releases each of them steers on, the gap between their policy rates, and the mood of the wider market. A move in either currency moves the pair.
Which currency in USD/CAD pays the carry?
Whichever of the two has the higher policy rate: long that one against the other earns roughly the difference over a year, before your broker's spread on the swap. The gap for every pair is on the rate differentials page. The rate gaps
Do you publish a USD/CAD forecast?
No. We score both currencies every trading day and the pair score is the difference between them, with the reason written next to it. That is a reading of now, not a prediction, and the past readings are published with their misses. The track record
Is USD/CAD a good pair to trade?
It is worth your attention on the days the two sides disagree, and it is not on the days USD and CAD score the same. Which of those it is today is exactly what the ranking answers.