This is not financial advice, only compilation of what happened to be in the past.

USD/CAD—often called the “Loonie”—is a major forex pair where the US Dollar is the base currency and the Canadian Dollar is the quote currency. (See also: 7 major Forex pairs)
It is heavily influenced by:

• Oil prices (Canada is an energy exporter)
• Interest rate differentials (Fed vs Bank of Canada)
• North American economic data
• US recessions / risk sentiment shifts

USD/CAD is generally cleaner and more macro-driven than pairs like GBP/USD or USD/JPY. It often forms long multi-week trends due to its strong ties to commodities and central bank policy. Note that This Overview is based on 2025 Context.

1. Core Identity of USD/CAD

Oil-Correlated Pair

Canada is one of the world’s top crude oil exporters.
This means USD/CAD has a negative correlation with oil:

• Oil Up → CAD Strength → USD/CAD Down
• Oil Down → CAD Weakness → USD/CAD Up

This is one of the most reliable macro relationships in all of FX.

Traders must monitor:

• WTI Crude Oil prices
• US oil inventory data
• OPEC+ announcements
• Global demand changes

Interest Rate Differential Drives Direction

The pair is strongly driven by the policy stance of:

Federal Reserve (FOMC)

vs

Bank of Canada (BoC)

General tendencies:

• Hawkish Fed / Dovish BoC → USD/CAD rises
• Hawkish BoC / Dovish Fed → USD/CAD falls

BoC is known for sudden shifts—especially during oil shocks—so USD/CAD frequently trends sharply during central bank cycles.

• North-American Cyclical Correlation

Unlike EUR/USD or GBP/USD, USD/CAD reacts to both US and Canadian data at similar importance.

Canadian data especially influential:

• Employment
• GDP
• CPI
• Housing starts
• Trade balance

US data always matters because USD is the global reserve currency.

2. Recurring High-Impact Events That Move USD/CAD

1. Bank of Canada (BoC) Interest Rate Decision

Often creates the largest volatility in the month for USD/CAD.

Traders watch:

• Rate statement tone
• GDP growth expectations
• Oil assumptions in monetary policy
• BoC’s inflation outlook

2. Federal Reserve (FOMC) Meetings

Directly drives USD flows worldwide.

A hawkish surprise → USD/CAD sharply higher
A dovish surprise → USD/CAD sharply lower

3. Canadian CPI (monthly, GMT0 13:30)

One of the most important CAD-moving events.

The market reacts strongly because CPI determines whether the BoC raises or cuts rates.

4. Canadian Employment Report (monthly, GMT0 13:30)

Occasionally produces massive moves.
Canada’s labor market data often surprises, creating quick impulsive movements.

5. US Macro Data

Most influential events:

• NFP (Non-farm Payrolls)
• US CPI
• PCE
• ISM Manufacturing/Services
• US GDP

These affect USD demand and global risk sentiment.

6. Oil Inventories: API + EIA Reports

EIA report, released every Wednesday (GMT0 14:30), can move USD/CAD sharply.

API report (Tuesday evening) sometimes causes anticipatory moves.

3. Daily Timing Characteristics (GMT0)

USD/CAD is a very “sessions-dependent” currency pair.

Asia Session (23:00 – 06:00 GMT)

• Low volatility
• Low liquidity
• Minor movements unless oil prices change overnight

USD/CAD is one of the quietest pairs during Asia.

London Session (07:00 – 12:00 GMT)

• Volatility increases
• Price often forms the directional trend of the day
• Oil futures volume rises after 08:00 GMT

London sets the tone for the day’s range.

US Session (13:00 – 21:00 GMT) – The Main Event

This is the most important session for USD/CAD.

Reasons:

• Both US and Canadian news come out around 13:30 GMT
• Oil futures pit opens at 14:00–14:30 GMT
• NY equities influence risk sentiment
• Fed speeches happen here
• Canadian markets are fully open

Major breakouts most often occur:
13:15 → 16:00 GMT

4. Price Behavior Patterns of USD/CAD

1. Strong, Simple Trends During Central Bank Cycles

USD/CAD is one of the best pairs for multi-week swing trades during rate cycles (hikes/cuts).

Once it forms a directional trend:

• It tends to hold
• Pullbacks are shallow
• Oil reinforces the move

2. Whipsaws During Oil Inventory Days

Especially on Wednesdays around 14:30 GMT.

Price can:

• Spike rapidly in both directions
• Reverse trend mid-day

Oil traders often dominate flow during these hours.

3. Logical Fundamental Behavior

USD/CAD is well-behaved compared to “chaotic” pairs like GBP/JPY.

Moves are generally:

• Macro-driven
• Linked to commodities
• Correlated with rate expectations

Professional traders prefer USD/CAD for this reason.

4. Sharp Reactions to Surprises in Canadian Data

Canadian data often comes with large surprises, unlike American releases which are well forecasted.

When Canada shocks:

• USD/CAD can make 50–120 pip spikes
• Often without retracement

Traders must beware of holding positions during Canadian employment or CPI.

5. Tendency to Range in Between Data Cycles

USD/CAD frequently trades sideways when:

• Oil range-bound
• Fed silent
• BoC in neutral stance

These ranges can last days or weeks.

5. Correlations Traders Should Know

Positive Correlations

• USD/CAD ↗ when DXY (US Dollar Index) ↗
• USD/CAD ↗ when Oil ↓

Negative Correlations

• USD/CAD ↘ when Oil ↑
• USD/CAD ↘ when CAD/JPY ↗

Correlation with oil is so strong that many algos use oil prices as a leading indicator.

6. Additional Important Notes

• Spread & Liquidity

• Tight spreads during US session
• Widest spreads during Asia

• Strong Reaction to Risk Sentiment

When global markets panic:

• USD strengthens
• Oil falls
• CAD weakens
  → USD/CAD often surges violently

• Avoid Overleveraging During Data

Because one data release can completely reverse the trend, risk management is crucial.

• Well Suited for Swing Trading

USD/CAD is highly respected by medium-term traders due to its:

• Predictable macro behavior
• Strong trend cycles
• Correlation to commodities

Summary for Traders

USD/CAD is a macro-driven pair with a clear identity:

• Heavily tied to oil prices
• Moves strongly during US & Canadian data releases
• Most active during the US session
• Trending behavior during rate cycles
• Cleaner and more predictable compared to GBP/USD or USD/JPY

It requires paying attention to:

• Oil inventories
• FOMC
• BoC
• Canadian CPI & employment
• Risk sentiment

(See also: 7 major Forex pairs)