Canadian Dollar (CAD)
The Canadian Dollar is a commodity-linked currency sensitive to oil price movements. Canada's energy exports make the USD/CAD pair a key reference for North American trade.
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A short history of the Canadian Dollar
Canada adopted its dollar in 1858, decimalized alongside the US to keep cross-border trade simple, and floated the currency in 1970 after decades of pegs. Canadians call the $1 coin the loonie (after the loon on its back) and the $2 coin the toonie — names that stuck so well that exchange desks worldwide use them.
The modern Canadian dollar is a classic commodity currency: what happens to Canadian resources — above all oil, but also lumber, grain, metals and potash — is what happens to the CAD.
What moves the CAD exchange rate
Three forces dominate, and they usually point the same way.
- Oil prices: Canada is a top-tier crude exporter, and USD/CAD has tracked WTI for years — rising oil generally means a stronger loonie
- The US economy: about three quarters of Canadian exports go to the United States, so US demand is Canadian income
- Bank of Canada policy: inflation targeting since 1991, with rate decisions moving the pair alongside the Fed's cycle
The Canadian Dollar in practice
Travelers find Canada entirely card-first — credit and debit work everywhere, tips are expected (15–20%), and cash is mostly for small markets. Prices are displayed without sales tax, which is added at checkout, a recurring surprise for visitors.
The US–Canada corridor is one of the cheapest remittance routes in the world thanks to fierce competition, while corridors beyond North America cost more and deserve comparison. For businesses, the CAD's oil-and-US linkage makes it a natural hedge for anyone buying Canadian resources or selling into Canada.
Popular Canadian Dollar conversions
USD/CAD is one of the most liquid pairs in the world. CAD/JPY is a favorite oil-linked cross. EUR/CAD and GBP/CAD serve European travel and trade, and CNY/CAD has grown with Chinese demand for Canadian commodities.
Frequently asked questions
Why does the Canadian Dollar follow oil prices?
Crude oil is Canada's largest single export, and export earnings flow into the currency. When oil rises, Canada's terms of trade improve and the loonie tends to strengthen against currencies of oil importers.
What are loonies and toonies?
Nicknames: the loonie is the $1 coin (a loon appears on it, since 1987) and the toonie is the $2 coin (introduced 1996). Both replaced paper notes that wore out too fast.
Is Canada expensive to visit?
By US standards, mid-range costs are similar, but the sales tax (5–15% depending on province) is added at the register, and tips of 15–20% are expected — budget with both in mind.