Trading The CAD
Trading The Canadian Dollar (CAD): After its establishment in 1934 the remit for the Bank of Canada was to “focus on the goals of low and stable inflation, a safe and secure currency, financial stability and the efficient management of government funds and public debt.” Acting independently like the SNB, it is sometimes regarded as a corporation, with the Ministry of Finance of Canada directly holding shares. Though the government’s proximity of interest is close, the governor of the Bank of Canada has responsibility for promoting price stability distanced from the government yet simultaneously addressing its concerns. Their benchmark for inflation is 2-3%, so the Bank of Canada tends to err on the side of caution and is probably more hawkish than accommodative to price deviations.
Staying up there with major currencies, the Canadian dollar can be expected to trade in a range across 30-40 pips. Moreover, Canada is an exporter of crude oil, which creates a unique relationship with the performance of its currency. Thus, many traders invest in this currency to hedge current commodity positions perhaps, or as pure speculation for tracking signs of movement in the oil market.
