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Although it is often considered a "petrocurrency", the direction of the Canadian dollar (or loonie – a reference to the bird on the one-dollar coin) is driven chiefly by broader changes in global risk appetite and the interest rate differential between the US and Canada. A historic link to commodity prices has weakened to some extent in recent years—a reflection of how US shale production has made terms-of-trade fundamentals look more similar on both sides of the 49th parallel. Conversely, increasing levels of household and corporate debt have made the loonie more sensitive to local and global financial stability concerns.
Indicative Interbank Spot Exchange Rate, Price of 1 US Dollar in Canadian Dollars, Updates Daily
The spot exchange rate is the indicative exchange rate applied to interbank foreign exchange transactions that are settled on the spot date – typically within two working days. The “base currency” is the first currency appearing in the pair, followed by the second part of the quotation, called the “counter currency”. The exchange rate indicates how much of the counter currency is needed to buy one unit of the base currency.
Year to Date Performance
Gain or Loss Relative to USD, Year to Date, Updates Daily
Represents the percentage change in the nominal exchange rate relative to the US dollar year to date.
Year-To-Date % Change in CADUSD Exchange Rate, Adjusted for Breaks, Updated Daily
Historical Movement compares this year’s exchange rate movement – the thick black line – with movement in previous years – the thinner blue lines – to illustrate the degree to which the rate has moved. Performance is equal to the percentage gain or loss in the exchange rate realized over the number of trading days shown on the horizontal axis.
Maximum Absolute Change in USDCAD Exchange Rate Calendar 1- or 3-Month Periods, Updates Monthly
Trading Ranges are equivalent to the difference between maximum and minimum exchange rates – expressed as a percentage of the opening USDCAD exchange rate – over each calendar one- or three-month period.
Estimated USDCAD Expiration Range By Confidence Interval, Updates Daily
The Probability Analysis chart, based on a standard deviation bell curve, uses realized historical volatility to illustrate the likelihood that the exchange rate will end within a defined trading band at expiry. For example, we can be confident that 85 out of 100 times, the exchange rate will fall within the upper and lower bounds shown at the 85% confidence interval – and the exchange rate could end above or below these bounds in 15 out of 100 cases.
Please Note: The confidence intervals depicted are generalized measures of probability based upon a parametric/ delta-normal analysis of a 5-year historical distribution of market movements, and are used to estimate the exchange rate uncertainties associated with different currencies and time periods. Smaller or larger movements than those outlined are possible. In currency markets specifically, major political and economic events can trigger moves that exceed any historically-driven model parameters.
The 12-month forward differential quantifies the difference – expressed in basis points – between the prevailing spot exchange rate and a 12-month outright forward contract. This difference does not express a directional market view on future spot rates, but is instead derived from the gap between the interest rates in the two currencies in the pair. The differential can be positive or negative depending on which currency has the lower or higher interest rate, with the higher yielding currency discounted going forward and vice versa.
Indicative 12-Month USDCAD Forward Points by Month, Updates Weekly
The forward curve illustrates the difference – expressed in basis points – between the prevailing spot exchange rate and outright forward contracts for various future dates. These differences do not express a directional market view on future spot rates, but are instead derived from the gap between the interest rates in the two currencies in the pair over each period. The differential can be positive (premium) or negative (discount) depending on which currency has the lower or higher interest rate, with the higher yielding currency discounted going forward and vice versa.
2- and 10-Year CAD-USD Government Bond Yield Differential, %, Updates Weekly
The Yield Differential chart illustrates the difference between 2- and 10-year Canadian government bond yields and their equivalent US Treasury yields. Positive values indicate a higher yield in Canadian dollars than in US dollars, while negative values imply the opposite.
Net Long (+) or Short (-) Canadian Dollar Futures Position, Billions US Dollars, Updates Weekly
The Commodity Futures Trading Commission's weekly Commitments of Traders report provides a breakdown of the net positions for "non-commercial" (speculative) traders in US futures markets. Market participants follow the data to identify extreme long or short positions in a currency - something that can signal a trend reversal.
Purchasing Power Parity
Canadian Dollar, Under (-) or Over (+) Valuation vs. US Dollar, OECD PPP, Updates Daily
Purchasing Power Parity measures whether market exchange rates are theoretically overvalued or undervalued. Purchasing Power Parities are conversion rates that attempt to equalize the purchasing power of different currencies by eliminating the differences in price levels between countries. Note that market rates can deviate from Purchasing Power Parity rates for years, even decades, at a time – so cannot be used to reliably forecast future exchange rate movements.