⭐ 1. What Is USD/CAD? (Quick Definition)
by google
USD/CAD tells you how many Canadian Dollars (CAD) are needed to buy 1 US Dollar (USD).
Example:
If USD/CAD = 1.35, then 1 USD = 1.35 CAD.
⭐ 2. Birth of the Canadian Dollar (1800s–1930s)
✔ 1841–1858: Before CAD – The Canadian Pound
Canada used the Canadian pound, partially linked to British currency.
✔ 1858: Canada Creates the Canadian Dollar
Canada switched to a dollar system aligned closely with the US because of expanding trade.
Approx start value: 1 CAD ≈ 0.92 USD
✔ Early 1900s: Gold Standard Era
Both countries used the gold standard, keeping USD/CAD extremely stable.
⭐ 3. 1931–1949: Leaving Gold & Fixing to USD
1931 – Great Depression Impact
Canada abandoned the gold standard → CAD floated briefly.
1939–1949: WWII & Bretton Woods System
Canada pegged the CAD at roughly:
1 USD = 1.10 CAD
A weaker CAD helped Canadian exporters during the war economy.
⭐ 4. 1950–1962: The World’s First Major Floating Currency
Canada allowed CAD to free-float in 1950 — the first major country to do so.
USD/CAD moved based on:
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Commodity exports
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Timber & mining output
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U.S.–Canada trade flows
CAD was often stronger than USD during this period.
⭐ 5. 1962–1970: Canada Refixed CAD to the USD
Due to financial instability, CAD was again pegged at:
1 USD = 1.081 CAD
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| by google |
Global trends soon forced a move back to floating.
⭐ 6. 1970–Today: Modern Free-Floating USD/CAD Era
On May 31, 1970, Canada permanently returned to a floating currency system.
This marks the beginning of the modern tradable USD/CAD market.
⭐ 7. Long-Term USD/CAD History (1970–2025)
| Era | USD/CAD Range | Key Reason |
|---|---|---|
| 1970s | 0.95–1.05 | Strong CAD, global inflation, commodity demand |
| 1980–1985 | 1.10–1.40 | Strong USD era + falling oil prices |
| 1991–2002 | 1.35–1.62 | Canada’s economic weakness + U.S. tech boom |
| 2002–2011 | 0.95–1.10 | Commodity supercycle strengthens CAD |
| 2007 | 1.00 (Parity) | Oil at record highs |
| 2011 | 0.95 | CAD strongest in modern history |
| 2014–2016 | 1.27–1.46 | Oil crash damages CAD |
| 2020 (Covid) | 1.45 | Panic → USD surges |
| 2022–2024 | 1.30–1.39 | Fed hikes + oil volatility |
| 2025 | 1.34–1.39 | Global USD strength |
⭐ 8. Major Global Events That Shaped USD/CAD
1. 1973 Oil Shock
Oil prices spiked → Canada benefited → CAD strengthened sharply.
2. 1980–1985 Reagan Strong-Dollar Era
USD appreciated worldwide → USD/CAD climbed toward 1.40.
3. 1990s Weak CAD Cycle
Caused by:
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Low Canadian productivity
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Budget deficits
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U.S. tech boom
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Weak commodity prices
This led to the all-time USD/CAD high above 1.61 in 2002.
4. 2000–2011 Commodity Supercycle
High demand for Canadian oil, metals, lumber → CAD dominated.
USD/CAD traded near parity for years.
5. 2014–2016 Oil Market Collapse
Oil crashed from $110 → $26 → CAD fell heavily.
USD/CAD jumped to 1.46.
6. 2020 Covid Crash
Global panic pushed USD/CAD to 1.45.
7. 2021–2024 Rate-Hike Battles
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Fed raised rates faster → USD stronger
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BoC lagged → CAD weakened
⭐ 9. Core Forces Driving USD/CAD
1. Oil Prices (CAD’s Lifeblood)
Canada is a major exporter of energy.
Thus:
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Higher oil → stronger CAD → lower USD/CAD
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Lower oil → weaker CAD → higher USD/CAD
2. Interest Rate Differentials
When Federal Reserve rates > Bank of Canada, USD attracts capital → USD/CAD rises.
3. U.S.–Canada Trade Relationship
The largest border trade in the world.
Strong U.S. economy = a stronger USD.
4. Risk Sentiment
USD = safe-haven currency.
During global fear → USD/CAD rises.
5. China’s Commodity Demand
China buying Canadian metals, energy → boosts CAD strength.
⭐ 10. Key Institutions Moving the Pair
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Bank of Canada (BoC)
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by google
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Statistics Canada
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Canadian energy sector
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U.S. economic data (CPI, NFP, GDP, FOMC meetings)
⭐ 11. USD/CAD Trading Behaviour
Characteristics:
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Closely tracks oil price movements
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Sensitive to economic news
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Long, smooth multi-year cycles
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Strong reactions to Fed announcements
Typical Volatility:
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Normal day: 60–90 pips
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Big news: 150–250 pips
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Crisis: 300–500 pips
⭐ 12. USD/CAD All-Time Records
| Category | Level | Year |
|---|---|---|
| All-Time High | 1.617 | 2002 |
| All-Time Low | 0.905 | 2007 |
⭐ 13. USD/CAD in 2025
Current range: 1.34–1.39
Main drivers:
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Uncertain oil demand
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High U.S. bond yields
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Fed stronger than BoC
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Slower Canadian economic growth
⭐ 14. Quick Summary
USD/CAD is primarily driven by:
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Oil prices
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Interest rate differences
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U.S.–Canada trade dynamics
Its long history includes:
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Gold standard stability
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Fixed exchange eras
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Floating currency innovations
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Commodity booms
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Oil price crashes
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Global financial shocks
Disclaimer : The content on this blog is for informational purposes only and does not constitute financial, investment, tax, or legal advice. I make no guarantees about the accuracy or completeness of the information provided. You are responsible for your own financial decisions—always consult a qualified professional before acting on any information from this site. I am not liable for any losses or damages resulting from the use of this blog.
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