The North American neighbours hold one of the most heavily traded currency pairs by volume in the world, and it’s certainly the most heavily traded pair which involves the CAD. This is known as a commodity pair – namely that it’s a pair traded between two currencies which are closely linked to commodities.
The pair is closely tied to the trading relationships between the two countries. The are two of the closest trading partners in the world and the fortunes of the pair are closely linked to fluctuations of energy commodities between the two. Fluctuations in the price of crude oil can have a significant impact on the exchange rate between the two. Falling energy prices can have a major impact on the Canadian economy and has, in the past, seen the value of CAD decline. For the US, meanwhile, cheaper energy prices can be a boom for GDP.