Canada has a close economic romance Together with the US, that's its greatest trading associate. The two nations share the earth’s longest undefended border and possess a cost-free trade settlement, which implies that a significant portion of Canadian exports are destined to the US industry.

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Consequently, the Canadian dollar is greatly motivated with the energy on the US financial state as well as US greenback.

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two. Fascination Premiums: The Financial institution of Canada sets curiosity charges in Canada, although the Federal Reserve sets interest rates in the US. When desire rates are higher in a single region compared to Yet another, investors usually tend to spend money on the region with the higher desire fees.

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This approach to financial policy has served to help keep the Canadian economy secure as well as the Canadian greenback reasonably predictable.