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EURCAD Currency Pair

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Overview | EURCAD Chart | Key Facts

The EURCAD Currency Pair

The pairing of the euro (EUR) and Canadian dollar (CAD) is said to be a “cross currency” pairing. A cross currency pairing is defined as being the exchange of two specific global currencies on the forex that does not include the United States dollar (USD). Cross currency pairings are commonly referred to as “cross pairs.”

Traditionally, traders and investors interested in exchanging international currencies had to trade for United States dollars before completing the transition into the destination currency. For instance, if an individual was interested in trading euros for Canadian dollars, he had to first exchange euros for USDs, and then trade the USDs for CADs. The creation of the cross pair enables traders to transition between global currencies without being exposed to exchange rate volatilities often present in the USD.

The most frequently traded cross pairs on the forex are:

Considered to be “major” global currencies, the EUR and CAD are among the top-eight most frequently traded in the world. According to the International Bank of Settlements (IBS), the EUR is the second most regularly traded currency, present in 31.3% of all transactions. The CAD ranks sixth globally, and is involved in 5.1% of transactions. The EUR/CAD is the seventh-most-traded cross currency pairing on the forex, representing .3% of total daily forex turnover.1)Retrieved 19 October 2016 http://www.bis.org/publ/rpfx16fx.pdf Because a typically lighter volume than other cross pairs, the EUR/CAD is said to be a “minor cross.”

The active trading of cross pairs such as the EUR/CAD affords the investor or trader several unique advantages:

EUR/CAD can provide investors a vehicle by which to trade the economics of the European Union (EU) while avoiding undue risk attributable to global macroeconomic factors. For example, the pair typically shows no correlation to US equities markets, specifically the S&P 500. This can be a tremendous asset when attempting to hedge an existing position in one of the majors, or try to capitalise upon the EUR or CAD in isolation.

Traders seeking to trade evolving economic conditions within the EU or Canada may elect to take either a long or short position in the pairing. Factors such as global commodity pricing (energy products), political unrest and monetary policy decisions made by the Bank of Canada and the European Central Bank all contribute to the stability of the EUR/CAD valuation.


Key Facts: EUR/CAD

Euro (EUR)

Canadian Dollar (CAD)

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