If you have an interest in Forex trading, then it is worth noting that the USD/CAD is one of the most traded currency pair in the Forex market. This pair is popular among seasoned traders and newbies, which explains why CAD to USD transactions commands a significant quota of the daily trade volume.
History of USD/CAD Trading
The US dollar is among the most traded currencies. It, thus, does not need any introduction when it comes to Forex trading. The use of the US dollar in Forex trade dates back to 1792 when it was formally introduced as the country’s currency. It also serves as a legal tender in many countries.
The Canadian Dollar (CAD) was first used in the early 1850s, following its departure from the colonial pound. The CAD first became independent from 1970. The strong ties between Canada and the US make the Canadian Dollar quite strong.
Role of the USD and CAD currencies
The US dollar stands out as the most traded currency in the world. Several factors affect this currency. Among the leading factors affecting the value of the US dollar are reports from the US Federal Bank Reserves, which are mostly used to predict market dynamics in the future. As with all currencies, it is also affected by economic and political events such as oil prices. As such, traders have to keep up with political and market factors that can influence these markets.
The Bank of Canada, on the other hand, regulates the Canadian Dollar, which is a significant influence of the value of CAD. This institution is responsible for enacting policies aimed at promoting economic growth, although its last primary intervention was in 1978. Canada is a renowned exporter, and its robust relationship with the US helps them maintain a strong position in the Forex market.
How to Trade on USD/CAD
An individual can trade USD to CAD contract for difference (CFD). If you want to trace on the USD/CAD currency pairs using CFDs, your main objective is to try to speculate the direction of the underlying asset. It is all about trying to make informed decisions about whom you think will win and who will lose. However, it would be best if you worked with a reputable broker who has what it takes to enhance your trading experience.