What is the “Loonie”?

    USD/CAD is a currency pair consisting of the US dollar and the Canadian dollar. This pair is known as the Loonie, or sometimes the “Funds”.

    It shows how many Canadian dollars (the quote currency) it costs to purchase one US dollar (the base currency).

    Trading USD/CAD “Loonie”

    The Loonie is one of the seven major currency pairs that contain the US dollar and are the most traded pairs on the forex market. Due to a large amount of trading, it is considered to be very liquid.

    As currency pairs are affected by external factors that influence an individual currency value, the USD/CAD will fluctuate according to the difference in interest rates set by the Federal Reserve (Fed) and the Bank of Canada. For example, any intervention by the Fed in the markets aimed at strengthening the US dollar would be likely to see a rise in the value of the USD/CAD.

    Historically, the Canadian dollar has generally reflected the US dollar’s own movements, rising against the US dollar while simultaneously falling against other international currencies and vice versa. This relationship also provides extra clues about shifts in the US economy generally to economists and forex traders. Also see a fundamental analysis.

    Since around 2002, however, the CAD has risen consistently against the USD as well as other international currencies. Volatility in global oil prices has also been matched by the volatility of the CAD as a petrocurrency (a currency in which oil is being bought) because of Canada’s role as a major oil exporter.

    The USD/CAD generally has a negative correlation with the currency pairs GBP/USDAUD/USD and NZD/USD, even over long periods, as the US dollar in these pairs is the quote currency rather than the base currency.

    To learn more about the economic impact on currency pairs, visit: