Second largest country and tenth largest economy of the world. It is no wonder that traders are paying so much attention to the national currency of Canada – Canadian dollar even though it movements are mirrored in the performance of oil.
Correlation and economy as a whole.
We have already talked about the correlation between CAD and oil here.
So. It is undeniable from here on out – CAD and oil are tight friends. But it might surprise you that mist of CAD GDP actually comes from the service sector and not from oil. Almost 70 percent of Canadian population is working in service industry. So it is quite logical that the biggest chunk of Canadian GDP is accounted for by a service industry.
Canada has been showing growth ever since the beginning of 1898. That was the time when Free Trade Agreement kicked in. Since then US and Canada have no trade tariffs between themselves and most of Canadian goods are exported into the USA.
Bank of Canada.
There is one very interesting thing about Bank of Canada. It does really have certain dates for meet-ups and decision making. Instead monetary law-makers have a regular 5/2 work week so they are free to alter monetary policies whenever they want to.
Their main task is to see to the inflation and to make sure that it does not rise above the 1-3 percent target. How is that possible? Well, using their work schedule BoC is adjusting rate policies constantly which gives us the opportunity to enjoy more or less stable currency… you know, inflation-wise.
BoC can also control what is called bank rate. And bank rate is basically how much money is going into the national economy as any given moment. And of course – the most basic task of the BoC is controlling the price rate in the country. But as we learned that is the most basic task of national banks there is.
In order to trade CAD one needs to know that they have a very narrow window to do so – the most active period of CAD trading is the overlap of EUR and USD trading. Those are the most active hours for the movement of CAD.
Those who want to predict what CAD is going to do are to look at USD. As the two economies are very tightly connected with each other it is only fair to say that every movement of USD is going to be repeated by CAD sooner rather than later.
1:00 AM GMT is the time to start trading CAD, so keep that in mind!