Getting to Know the CAD.

You might be wondering why the CAD is nicknamed after Canada’s national bird, the Loonie…

Well, that’s because that’s the engraved design on Canada’s coins!

Check out these other cool properties of the Loonie:

The Black Crack and Me

Historically, the price of black crack has been highly correlated with the USD/CAD. The general rule is that whenever oil prices start climbing, the CAD usually follows.

If the price of oil is projected to increase over the next couple of years, then you’d want to go sell the USD/CAD!

My work hours are short…

The USD/CAD has been known to move in tight ranges for the most part of the day.

It is only when U.S. traders are eating their Cheerios during the overlap of the European trading session and the US trading session that the pair begins to move.

…unlike my BFF, the USD…

A key factor to look at when trading the USD/CAD is that its direction is closely tied to the U.S. economy. Remember, more than being close neighbors, the U.S. and Canada engage in heavy trade with each other.

When the U.S. economy experiences robust growth, the Canadian economy is usually just right behind it! So whenever you decide to trade the CAD, take some time off to see how well (or poorly) the U.S. is doing.

…but I’m still feisty during the US session.

The CAD usually doesn’t start moving until the U.S. trading session, around 1:00 pm GMT. The CAD offers little movement during the Asian trading session and the morning European trading session.

Important Economic Indicators for the CAD

Consumer Price Index (CPI) – Similar to other central banks, the Bank of Canada’s objective is to make sure that inflation does not get out of hand.

Since the consumer price index tracks the increase (or decrease) in the prices of consumer goods and services, the report is closely watched by currency traders.

Gross Domestic Product (GDP) – The GDP is the broadest measure of Canada’s economic activity.

It reveals whether the country is growing or not.

Trade Balance – Just like other commodity-based countries, Canada’s economy is highly susceptible to changes in its export and import activities.

Ivey Purchasing Managers’ Index (PMI) – The PMI is a survey designed to see whether businesses are optimistic or pessimistic about the economy.

A reading above baseline 50.0 means that conditions in the business sector are growing while a reading below 50.0 indicates otherwise.

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