Before the 2000s, the CAD to USD exchange rate experienced significant volatility, influenced by various economic factors such as commodity prices, interest rates, and trade balances.
From the early 2000s until around 2011, the Canadian dollar strengthened against the US dollar, reaching parity in 2007 for the first time in decades. This trend was driven by robust economic growth, high commodity prices, and a strong Canadian economy relative to the US.
Following the global financial crisis in 2008 and the subsequent recession, the Canadian dollar began to weaken against the US dollar. This trend persisted through the 2010s due to factors such as declining oil prices, slower economic growth, and interest rate differentials favoring the US dollar.
The CAD to USD exchange rate has historically been heavily influenced by oil prices, given Canada's status as a major oil exporter. When oil prices rise, the Canadian dollar tends to strengthen, and vice versa. This correlation is particularly evident during periods of significant oil price movements.
Disparities in interest rates between the US Federal Reserve and the Bank of Canada have also played a role in driving exchange rate movements. Higher interest rates in Canada relative to the US can attract capital inflows, strengthening the Canadian dollar.
Global economic conditions, such as the health of the US economy, trade tensions, and geopolitical events, also impact the CAD to USD exchange rate. Economic uncertainties can lead to fluctuations in currency values as investors seek safe-haven currencies like the US dollar.
Despite short-term fluctuations, long-term trends in the CAD to USD exchange rate reflect broader economic fundamentals and structural factors. These trends can be influenced by changes in trade dynamics, government policies, and shifts in global economic power.
As of recent years, the CAD to USD exchange rate has shown resilience amid ongoing economic uncertainties, with fluctuations influenced by factors such as pandemic-related developments, fiscal policies, and global trade dynamics.