According to our correlation studies, the short-term link between the NYMEX WTI Crude oil contract and the USDCAD trades near record strength. A recent Bank of Canada interest rate announcement suggests that Canadian interest rates will remained unchanged, and the Federal Reserve is similarly unlikely to move rates.
The disparity between USDCAD spot and PPP-implied exchange rates has narrowed from the extremes but remains significant at over 1800 pips.
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.Learn forex trading with a free practice account and trading charts from FXCM. Welcome to the page of currency pairs exchange rate history graph, Canadian Dollar(CAD) To US Dollar(USD) Currency. Link to this page - if you would like to link to Canadian Dollar(CAD) To US Dollar(USD) Currency Exchange History.
The disparity between USDCAD and its PPP-implied exchange rate widened in December, Canadian Dollar now 16.9 percent overvalued relative to its US counterpart.
The Canadian Dollar has proven far more sensitive to shifts in the Dow Jones Industrial Average and global commodity prices. Thus USDCAD traders would likely do better in tracking crude oil and broader commodity markets as they trade the Canadian currency. While a steadily improving US economy will eventually give the Canadian Dollar an edge over the currencies of other commodity-producing countries where demand is tied to China and Europe, both of which are expected to decelerate through 2013, BOC rate hike expectations have yet to start reflecting that trend.
This approach says that an identical product should cost the same from one country to another, with the only difference in the price tag accounted for by the exchange rate. By viewing the currency pairs exchange rate history graph (different periods for selecting), you can get more previous performance about the two currencies. In the meantime, the intimate correlation between the Loonie and the S&P 500 suggest risk trends remain firmly in control, pointing to USDCAD gains as Eurozone debt fears and the broadly slowing global recovery weigh on risk appetite.
Indeed, current consensus forecasts suggest that the gap in benchmark interest rates is will shift by a further 75 basis points in the Canadian Dollar’s advance over the course of 2011, with only the New Zealand Dollar being promised an equally robust monetary policy landscape. As such, the current disparity may continue to widen for the time being before a correction materializes. We compare these values to current market rates to determine how much each currency is under- or over-valued against the US Dollar.
All told, while a strictly valuation-based analysis calls for a bullish bias for USDCAD, now does not seem like the opportune time to express it.
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