USD/CAD explained: how oil prices move the loonie
USD/CAD is two neighbours with very different shopping lists. One of them sells a lot of oil, and the chart often shows it.
At a glance
| USD/CAD | |
|---|---|
| What it is | How many Canadian dollars one US dollar buys (the CAD is the "loonie") |
| Pip size | 0.0001 |
| One pip is worth | C$10 per standard lot. In US dollars it depends on the price |
| Busiest hours (ET) | About 8 am – noon, when North America and London are open |
| What moves it most | Oil prices, the Bank of Canada, Canadian and US data |
| Trading hours | Sunday ~5 pm ET to Friday 5 pm ET |
Pip math, as an example. One pip on a standard lot is C$10. If USD/CAD were at 1.40, that's C$10 ÷ 1.40 ≈ $7.14. A math example, not a forecast. The pip value calculator does it at any price.
The nickname comes from the loon, a bird on Canada's one-dollar coin.
What moves it
- Oil. Canada is a big oil exporter, and much of it goes to the US. When oil rises, the loonie often gets stronger, so USD/CAD tends to fall. When oil drops, USD/CAD often rises.
- The Bank of Canada (BoC). It sets rates 8 times a year, with decisions at 9:45 am ET. It's one of the few central banks that speaks in the middle of the US morning.
- Canadian jobs and CPI. Both come out at 8:30 am ET. The Canadian jobs report often lands on the same Friday as the US jobs report.
- US data and the Fed. The US side is still half the pair.
- Weekly US oil stock numbers, from the US Energy Department, usually Wednesdays at 10:30 am ET, can nudge oil and the loonie.
Two jobs reports at once. On many first Fridays, US and Canadian jobs numbers hit at the same 8:30 am ET minute. If they point opposite ways, the pair can whip both directions.
When it's busiest
Both home markets are in North America, so USD/CAD is mostly a daytime pair for US traders. It picks up around 8 am ET and is busiest through the morning. The Asian session is usually slow, with wider spreads. The US and Canada change clocks on the same dates, so local news times stay put in ET.
Its personality
- Follows oil, loosely. The link is real but it comes and goes. Some weeks the rate story matters more.
- Steady trends. It often moves in long, grinding trends rather than sharp spikes.
- News clusters in the morning. 8:30 am data, 9:45 am BoC, 10:30 am oil stock numbers. A busy window for a few hours.
Reading it with our method
- Daily chart first. Mark the last places price turned around and name the trend.
- Know what oil is doing. Not a signal. Just context for whether the chart has a tailwind or a headwind.
- Wait for a body close past a level, not a tail.
- Size from the stop. Set the stop where the chart says, then size with the lot size calculator so the money at risk stays near 1%.
The economic calendar guide helps you mark BoC days and jobs Fridays.
Common mistakes
- Reading it backwards. The US dollar is first. Higher oil usually means a lower USD/CAD price, not higher.
- Using $10 a pip. The pip is in Canadian dollars, so in US dollars it's less, and it moves with price.
- Trading the 8:30 am jobs Friday blind. Two big reports at once can mean fast, messy candles. Many beginners wait until 9 am or later.
- Treating oil as a rule. Oil can rise while USD/CAD rises too, if US data is strong.
Questions
Why do oil prices affect the Canadian dollar?
Oil is one of Canada's biggest exports. Higher oil prices mean more US dollars flowing into Canada to buy it, which tends to support the loonie.
What time does the Bank of Canada announce rates?
At 9:45 am ET, on 8 scheduled days a year.
Why is the Canadian dollar called the loonie?
Canada's one-dollar coin shows a loon, a water bird. People called the coin a loonie, and the name spread to the currency.
How much is a pip on USD/CAD?
C$10 per standard lot. In US dollars that's 10 divided by the price, so roughly $7 to $7.50 when USD/CAD is near 1.35 to 1.40.
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