Canada is a country with a modern and dynamic economy. Based on per capita gross domestic product, Canada is the seventh country in the ranks of countries with the highest standard of living. Canada has export commodities of interest to the world, such as natural gas, timber, and crude oil. Canada has an advantage in the economy because it has a strategic geographical position, which is located in the north of the United States, one of the largest economic forces in the world. And because of this very close distance, a large number of commodities from Canada are exported to the United States. So the economies of the two countries become interrelated.
Canadian currency, Canadian Dollar (CAD), often referred to as "loonie" among forex traders, due to the "loon" figure in Canadian Dollar 1 coins.
Canada is one of the anomalies in the world economy. Because of the population, Canada's population is relatively fewer than any other country of the same size. However, regardless of the population, Canada's gross domestic product is in the top 10 of the world. And in export value, Canada ranked 9th in the world economy.
Another anomaly is also found in the Canadian currency, loonie. This currency is not part of the Bretton-Woods system (the system in which the amount of money in circulation is compared to that of the gold in the physical form by the state), so the value of this currency is in the free threshold until 1962 when depreciation strikes. Then the Canadian central bank intervened and brought the value of the loonie currency back in a direction that supported the Canadian economy. However, the intervention only lasted until 1998, as the government felt that the intervention by the Canadian central bank was ineffective and not of great benefit.
Characteristics of USD / CAD Pair
Spreads from forex brokers (on average): 1-4 pip;
Daily Range (average): 70-100 pips;
Best trading time: London Session and New York Session (2pm - 3am). For more information on this subject please read the Optimum Forex Trading Time article;
Crude oil commodity prices have a major impact on the movement of the Canadian Dollar;
The economic conditions of Canada's importers of products also underlie the development of the Canadian economy.
Factors affecting the movement of USD / CAD pair
Because of the strong relationship between Canada and the United States, the economic conditions of the United States play an important role in the movement of the loonie value. This relation is manifested in the form of import-export relations, of which half of Canadian export commodities are directed toward America, and nearly half of America's total import commodities come from Canada. Although the economic policies issued by the two countries are different, but still the American economy will have an indirect impact on Canada.
What is interesting is how these conditions result in a varied economic scheme in the Canadian economy. The main structure of the Canadian financial markets has prevented Canada from various problems, such as those facing America (mortgages and home value exemptions for example), and boosted the value of the Canadian currency. However, on the other hand, technological developments that are not as dear as American companies make the loonie value decline, especially when the rapid burst of technological growth took place in America in the 1990s.
On the other hand, changes in world crude oil prices and timber, directly affect the movement of the loonie value. This is because Canada is one of the largest exporting countries in the world, and this exports plays a major role in the Canadian economy and the Canadian government's monetary policy making. So that we can observe when the world oil prices are in a high enough level, then the bullish pattern we will find in the value of the Canadian currency. And, high world oil prices will also make the value of US Dollar decline, considering America is one of the largest oil importers in the world. So it will double the effect seen on the USD / CAD chart in the forex market.
China also contributes to the loonie value movement, as China is also a major importer of Canadian products. So China's fiscal and trade policies are one of the indicators that can be used in analyzing the direction of loonie value movements. In addition, the release of economic reports such as manufacturing sector production, inflation, state cash conditions, gross domestic product, and retail sales also play a role in changing the value of the loonie. It includes interest rates and news on natural disasters, elections, and political policies.
Canadian currency, Canadian Dollar (CAD), often referred to as "loonie" among forex traders, due to the "loon" figure in Canadian Dollar 1 coins.
Canada is one of the anomalies in the world economy. Because of the population, Canada's population is relatively fewer than any other country of the same size. However, regardless of the population, Canada's gross domestic product is in the top 10 of the world. And in export value, Canada ranked 9th in the world economy.
Another anomaly is also found in the Canadian currency, loonie. This currency is not part of the Bretton-Woods system (the system in which the amount of money in circulation is compared to that of the gold in the physical form by the state), so the value of this currency is in the free threshold until 1962 when depreciation strikes. Then the Canadian central bank intervened and brought the value of the loonie currency back in a direction that supported the Canadian economy. However, the intervention only lasted until 1998, as the government felt that the intervention by the Canadian central bank was ineffective and not of great benefit.
Characteristics of USD / CAD Pair
Spreads from forex brokers (on average): 1-4 pip;
Daily Range (average): 70-100 pips;
Best trading time: London Session and New York Session (2pm - 3am). For more information on this subject please read the Optimum Forex Trading Time article;
Crude oil commodity prices have a major impact on the movement of the Canadian Dollar;
The economic conditions of Canada's importers of products also underlie the development of the Canadian economy.
Factors affecting the movement of USD / CAD pair
Because of the strong relationship between Canada and the United States, the economic conditions of the United States play an important role in the movement of the loonie value. This relation is manifested in the form of import-export relations, of which half of Canadian export commodities are directed toward America, and nearly half of America's total import commodities come from Canada. Although the economic policies issued by the two countries are different, but still the American economy will have an indirect impact on Canada.
What is interesting is how these conditions result in a varied economic scheme in the Canadian economy. The main structure of the Canadian financial markets has prevented Canada from various problems, such as those facing America (mortgages and home value exemptions for example), and boosted the value of the Canadian currency. However, on the other hand, technological developments that are not as dear as American companies make the loonie value decline, especially when the rapid burst of technological growth took place in America in the 1990s.
On the other hand, changes in world crude oil prices and timber, directly affect the movement of the loonie value. This is because Canada is one of the largest exporting countries in the world, and this exports plays a major role in the Canadian economy and the Canadian government's monetary policy making. So that we can observe when the world oil prices are in a high enough level, then the bullish pattern we will find in the value of the Canadian currency. And, high world oil prices will also make the value of US Dollar decline, considering America is one of the largest oil importers in the world. So it will double the effect seen on the USD / CAD chart in the forex market.
China also contributes to the loonie value movement, as China is also a major importer of Canadian products. So China's fiscal and trade policies are one of the indicators that can be used in analyzing the direction of loonie value movements. In addition, the release of economic reports such as manufacturing sector production, inflation, state cash conditions, gross domestic product, and retail sales also play a role in changing the value of the loonie. It includes interest rates and news on natural disasters, elections, and political policies.
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