Oil dependency
The Canadian economy is heavily reliant on oil, the price of oil dictates the health of the economy.
The correlation between the Canadian dollar and oil is usually very high. That means that if oil is in a downtrend, the Canadian dollar often weakens, and on the other hand, if oil rises, so does the Canadian dollar.
As you could have noticed, the Canadian dollar is also the commodity-linked currency as its value is tied to oil. Moreover, the
Loonie is also a cyclical currency as the underlying asset (in this case, oil) is a cyclical commodity. That usually results in a stronger Canadian dollar during the global economic expansion, and the Loonie tends to decline in times of a recession.
Dovish Bank of Canada
The central bank of Canada raised rates in tandem with the Fed during 2016 – 2018, and the primary rate climbed toward 2.0%. However,
the Bank of Canada slashed its benchmark interest rate by 50 basis points to 0.25% at an emergency meeting on March 27th, 2020. The move followed a similar margin cut on March 13th. It brought borrowing costs to its effective lower bound, aiming to support the economy and the financial system amid the coronavirus pandemic. The main rate is at zero percent, but so is elsewhere in the world. The Loonie can't be used for Carry trades anymore.
Performance
Since 2013, the USDCAD pair is in a clear bullish trend. The leg higher in 2015 was caused by plummeting oil prices as oil cratered to 20s USD. The Canadian dollar declined significantly, as well. The following recovery brought the pair to the 1.25 – 1.30 region for some sideways trading, but in 2020 the pair again rocketed higher and retested the 2015 levels at around 1.45. This resistance hasn't been broken to the upside so far, and it looks like a nice double top pattern. All will depend on oil prices.
Source: Purple Trading Metatrader 4
USDCAD – Quotes and trading
If you open our Purple Trading Metatrader 4 platform, right-click on the USDCAD pair and choose "new order," the following popup will appear:
Source: Purple Trading Metatrader 4
The regular spread between the Ask and the Bid price is usually 1.2 pips, but this spread can fluctuate slightly, depending on the actual volatility and market conditions.
Lot value calculation
The minimum amount to trade is 0.01 lot, while one full lot represents 100,000 USD. So, if you are trading 0.01 lot (or a micro lot), you will be trading 1,000 USD. The 0.1 lot is also called a mini lot and represents 10,000 USD. If you want to buy or sell half a lot, you will be trading 50,000 USD. Two lots are 200,000 USD and so on.
Besides, you can open a market execution trade, which means that it will be immediately done at the current market price, or you may use pending orders – limit and stop orders. Finally, it is possible to use the stop-loss and take-profit orders when opening the trade, or you can add them later when the deal is live.