How Does USD Price Influence CAD?

The United States Dollar is among the most reputable and traded currencies worldwide. The Canadian Dollar isn’t far behind, considering that it ranks seventh in the most tradeable currencies in the Forex market.
Although they are both strong assets, the USD price is capable of affecting CAD value. Our article discusses historical price patterns and current trends. You’ll also discover top strategies that USD/CAD traders can apply in the market.

he United States Dollar to CAD: History of Exchange Trade Rates

Peeking into the rich history of the United States Dollar to CAD price changes can provide some interesting info regarding the two currencies. For example, if you compare the past two decades, the USD/CAD rate improved by 13.57%. On several occasions, the price of USD was under $1 compared to CAD. However, that hasn’t happened since 2013, so for over a decade.
To obtain useful trading information, it’s best to analyze the last couple of years or less. Here’s what we discovered during that analysis:

• At the start of November 2024, the United States Dollar to CAD price was $1.3953.
• The price has been increasing for three months after a drop in July. The improvement was over 3% compared to August 1st, when the price was $1.3453.
• In the last two years, the total price change was 2.42%.
• The United States Dollar to Canadian Dollar ratio had the highest value in the last two years at the time of writing (November 2024). The lowest one in the same period was $1.3091.

Many factors contribute to these price changes and trends. The economic health of both countries is a major influence. If the USD demand goes up, its value increases, and that includes the price relative to CAD. However, USD might be more sensitive to global financial events. During the global crisis in 2008, the currency lost value due to uncertainty among investors. At those times, it occurred that the United States Dollar calculator CAD rates went under 1:1.

Best Strategies to Consider for CAD/USD Traders

Investors can use different strategies for this currency pair, and here are some suggestions:

• The forex market is available 24/7, but you should use the most volatile times. You have different sessions, such as American, European, Asian, and Pacific, but the market hours are around the clock. Considering that most news regarding Canada and the USA arrive at about 8-9 AM EST, that’s when the volatility might be the highest.
• Use fundamental analysis to your advantage. Begin by analyzing macroeconomic indicators, ranging from interest and employment rates to GDP growth and trade balances. Continue by checking oil price movements and monetary policies.
• Don’t forget technical analysis. Historical price data, moving averages, candlesticks, and other patterns can help determine the right timing to invest in USD/CAD.
• Short-selling USD. If the analysis shows that the USD value will decline, you can sell it and wait for a moment to purchase it at a lower price. Going long, on the other hand, would mean you acquire USD, expecting it to gain value compared to CAD.
• Day trading. These include purchasing and selling the same pair during the same minute, hour, or day. This is a more active strategy that can deliver small but significant gains in a short while.
• News and sentiment trading. If you follow the latest news, you might get an idea of the future trajectory of USD/CAD value. The news often leads to different market sentiments, which can also affect asset worth. If you act quickly, you can capitalize on those changes.
• The importance of hedging strategy. Hedging is a strategy that focuses on managing risks and potentially decreasing invested losses. The idea is to make another investment but in the opposite position of the current asset. It can offset large losses, but it can also decrease potential gains.

Future Trajectory

It’s hard to predict the future movement of USD and CAD values. An educated guess would be that the US Dollar will maintain a higher value than the Canadian counterpart.
Here’s an overview of the events that could affect the future United States Dollar to CAD chart trajectory:

• US elections. 2024 is the election year in the United States, and political events can have a significant impact on the economy. It takes months after choosing POTUS to see the actual effects on the market and USD value.
• Oil prices. Canada’s economy strongly relies on natural resources. Oil and other exports are a vital factor in their currency’s strength. Many investors call CAD a “commodity currency” since its value depends on oil prices. If they go high, Canada’s export revenue will increase, and that will contribute to CAD worth relative to the USD. However, if the oil price goes down, that’s bad news for CAD.
• Trading relations. The United States and Canada generally collaborate closely in the economy and other fields. Considering they are neighboring countries, many trade agreements, tariffs, and economic policies are active. Potential changes in these trading agreements can affect the USD to CAD conversion rates.
• Interest rates. The Federal Reserve is the United States central bank, while the Bank of Canada has that role in their neighboring country. These are independent bodies, but for a comparison of USD/CAD, it’s important to consider the interest rates they impose. The Federal Reserve might attract foreign capital with higher interest rates, and that can have a positive influence on USD.

Conclusion

The rates at which you can convert the United States Dollar to CAD change frequently, and if you invest wisely, you can capitalize on those price adjustments. Many factors affect the USD to CAD ratio, ranging from geopolitical factors to the latest news regarding the national economies and industries of the two countries. Staying informed and using technical analysis can be crucial when deciding on the right timing and entry and exit positions to pursue to potentially profit from this currency pair.