What Is the USD/CAD (U.S. Dollar/Canadian Dollar)?
USD/CAD is the abbreviation for the U.S. dollar versus Canadian dollar (USD/CAD) currency pair. The quote given for the USD/CAD currency pair tells the reader how many Canadian dollars (the quote currency) are needed to purchase one U.S. dollar (the base currency).
Trading the USD/CAD currency pair is also known as trading the "loonie," which is the name for the Canadian one dollar coin, which depicts its namesake bird. The USD/CAD is also one of the most liquid and actively traded pairs in the forex market.
Key Takeaways
- USD/CAD is the currency pair for the U.S. and Canadian Dollars.
- This quote tells you how many CAD can be bought with one USD.
- The USD has typically been stronger than the CAD over time, although it had reached parity of 1:1 briefly following the Great Recession.
Understanding the USD/CAD Currency Pair
The value of the USD/CAD pair is quoted as 1 U.S. dollar per X Canadian dollars. For example, if the pair is trading at 1.20 it means that it takes 1.2 Canadian dollars to buy 1 U.S. dollar, or alternatively that 1 CAD is worth $0.833 USD.
Although the USD/CAD currency pair has reached parity at different points in history (i.e. 1:1), the U.S. dollar has traditionally been the stronger of the two currencies. The USD/CAD currency pair is quite actively traded as there are significant business ties between the two nations.
Factors that Affect the USD/CAD Currency Pair
The USD/CAD is affected by factors that influence the value of the U.S. dollar and/or the Canadian dollar in relation to each other and other currencies. For this reason, the interest rate differential between the Federal Reserve (Fed) and the Bank of Canada (BoC), will affect the value of these currencies when compared to each other. When the Fed intervenes in open market activities to make the U.S. dollar stronger, for example, the value of the USD/CAD cross will increase because it will take more Canadian dollars to purchase the stronger U.S dollar.
The value of the Canadian dollar is also highly correlated with the price of commodities, especially that of crude oil. Because the Canadian economy is heavily reliant on oil, the price of oil dictates the state of the economy and the currency itself. For this reason, the Canadian dollar is often labelled as a commodity currency.
USD/CAD and Parity
As mentioned, the USD/CAD pair has seen its traditional relationship hit price parity. For example, in the aftermath of the Great Recession and the subsequent quantitative easing from the U.S. Federal Reserve, the Canadian dollar soared against the U.S. dollar to trade below parity, eventually reaching 0.95. In fact, almost all of the instances of parity have been related to periods of U.S. financial difficulty or high oil prices—sometimes both.
In 2016, however, oil prices slumped to decade-lows, trading below $30 a barrel. Consequently, the Canadian dollar hit a record low, trading to 1.46. This meant it required 1.46 Canadian dollars to buy 1 U.S. dollar. As of August 2021, the USD/CAD rate is roughly 1.25.
FAQs
Basic Info. US Dollar to Canadian Dollar Exchange Rate is at a current level of 1.377, up from 1.375 the previous market day and up from 1.348 one year ago. This is a change of 0.10% from the previous market day and 2.10% from one year ago.
Is CAD USD the same as USD CAD? ›
Reading the USD/CAD Price
The USDCAD currency pair represents the price of the base currency (USD) in relation to the quote currency (CAD). The USDCAD is an exchange rate that specifies how many CAD can be converted into one USD.
What is the relationship between the Canadian dollar and the U.S. dollar? ›
1 USD = 1.37729 CAD Apr 18, 2024 23:18 UTC
The currency converter below is easy to use and the currency rates are updated frequently. This is very much needed given the extreme volatility in global currencies lately. Sending money abroad is as easy as ever.
What does USD to CAD mean? ›
USD/CAD is the abbreviation for the U.S. dollar versus Canadian dollar (USD/CAD) currency pair. The quote for the USD/CAD currency pair defines how many Canadian dollars or quote currency are needed to purchase one U.S. dollar, the base currency.
What makes Canadian dollar go up and down? ›
The value of the Canadian dollar rises or falls according to how much people in foreign exchange markets want to buy and sell it—that's what makes it float. The Bank of Canada doesn't try to set the dollar's exchange rate. We let markets set its value.
Why is CAD going down? ›
The market is saying that Canada is heading for a needlessly weak economy in 2024/25 that could be remedied with gradual rate cuts now. Instead, the Canadian economy will fall further and the Bank of Canada will ultimately cut to lower rates. That's why the loonie is weakening today.
Is it better to use USD or CAD in Canada? ›
Carry USD to Canada
Though this currency is widely accepted at retailers, hotels, and border crossings, smaller rural areas prefer the local currency and do not accept USD. Hence, you need to use the Canadian official currency for your local cab fare, laundromats and other things.
What is the strongest currency in the world? ›
Kuwaiti Dinar (KWD)
The Kuwaiti dinar is the strongest currency in the world, with 1 dinar buying 3.26 dollars (or, put another way, $1 equals 0.31 Kuwaiti dinar). Kuwait is located on the Persian Gulf between Saudi Arabia and Iraq, and the country earns much of its wealth as a leading global exporter of oil.
What drives the Canadian dollar? ›
Our trade surplus or deficit with other nations has a significant influence on the Canadian dollar. For example, a higher price for crude oil leads to an appreciation of the loonie. Interest rates also have an effect.
Is the Canadian dollar up or down? ›
Canadian Dollar to US Dollar Exchange Rate is at a current level of 0.7270, down from 0.7297 the previous market day and down from 0.7494 one year ago.
During trading on September 20, 2007, it met the U.S. dollar at parity for the first time since November 25, 1976. Inflation in the value of the Canadian dollar has been fairly low since the 1990s. In 2007 the Canadian dollar rebounded, soaring 23% in value.
What is the lowest the Canadian dollar has been to the U.S. dollar? ›
A: 11 July 1864: All-time Canadian-dollar high US$2.78 B: 21 January 2002: All-time Canadian-dollar low US$0.6179 1. January 1862: U.S. suspends convertibility.
Is the Canadian dollar going up in 2024? ›
The U.S. dollar to Canadian dollar exchange rate history shows a decline since 2020, although figures pickd up substantially since mid 2022. By April 19, 2024, one U.S. dollar could buy roughly 1.37 Canadian dollars.
