The USD/CAD currency pair expresses the value of one US dollar in Canadian dollars.
Known informally as the loonie, the Canadian dollar is the world's seventh most traded money and a number of central banks keep it as a reserve currency.
Its value in relation to the US dollar, as well as other major currencies, is heavily influenced by oil prices.
This is because Canada has vast oil reserves - second only to Saudi Arabia - and is a major producer of the commodity, with 99 per cent of its crude oil exports sent to the US.
It is estimated that more than two million barrels of oil travel from Canada to its southern neighbour every day.
The price of oil therefore acts as a leading indicator for the movement of the USD/CAD pair. When oil prices grow up, USD/CAD falls because the value of the Canadian dollar appreciates.
In addition, the general economic health of the US has a significant impact on the pair and market interventions by the Federal Reserve will affect the value of both currencies.
The strength of the Canadian economy saw the loonie rise sharply against the greenback in September 2007, closing above the US dollar in trading for the first time in 30 years.
It went on to reach a record high of US$1.1024 in November and was named Canadian Newsmaker of the Year by Time magazine in 2007.
USD/CAD Market Influences
Internal, regional, and international political conditions and events of any particular country can have a profound effect on the forex prices. Market psychology and trader perceptions influence the forex prices in different ways, unsettling international events can lead to a greater demand, thus a higher price, for currencies considered as stronger over their relatively weaker counterparts. Beside these there are some other factors also, that influence the forex prices.