Canadian Dollar is the Sixth Most Traded Currency Worldwide
The Canadian dollar (CAD) is the world’s sixth most traded currency in 2018. That’s according to IG’s recent analysis of the forex market, which is the largest trading market on the planet with daily trades placed to the value of more than US$5 trillion. The list has not changed much since the last review of the most-traded fiat currencies in 2017. Bullmarketz revealed that only two currencies have changed places in the latest top ten rankings 12 months later.
The Canadian dollar sits just behind the Australian dollar as the sixth most traded fiat currency, with average daily trading volumes valued at US$130 million. In terms of the currencies that are most commonly held in reserve, the Canadian dollar ranks fifth, amounting to 2.02% of all global reserves in value, according to the International Monetary Fund (IMF). Historically, the Canadian dollar has always been sensitive to the strength of the economy in the United States of America, given that 75% of Canada’s exports are sold to the USA. Consequently, the CAD/USD currency pair is one of the most fascinating ones to trade for retail investors. Even people at home can now trade forex pairs like CAD/USD thanks to CFD trading platforms that offer tight, all-inclusive spreads on leading fiat currencies.
One of the most influential factors in the value of the CAD against the USD is the interest rates of the respective nations. Whenever the Bank of Canada opts for interest rates higher than the US Fed’s, the CAD is more likely to appreciate against the USD and vice versa.
US dollar remains top of the pops
“Federal Reserve” (CC BY 2.0) by rlinger
The fiat currency at the top of the pile when it comes to the world’s most traded currency in 2018 was the US dollar. The Bank for International Settlements (BIS) said that average daily trades on the USD amount to an eye-watering $2.2 trillion. The USD remains the world’s leading ‘reserve currency’ i.e. the currency that central banks and high street banks retain for the purposes of global transactions and business.
The official currency of the European Union (EU), the euro, is the second most traded currency on the planet this year; although, it does not come a close second by any means. Its daily average trading volumes amount to just under $800 million – almost three times less than the US dollar. The euro is also a well-stocked reserve currency, with one-fifth of the world’s financial reserves said to be euros. At the time of writing, some 19 of the 28 countries within the EU use the euro as their official currency. Any new member of the EU is required to use adopt the euro under the terms of the Maastricht Treaty.
CAD remains more popular to trade than the emerging Chinese ‘yuan’
Somewhat surprisingly, the Canadian dollar is above the Chinese renminbi (CNH) as a popular fiat currency for trading. The official currency of the People’s Republic of China is widely regarded as an emerging market currency but, as yet, it does not have the same pulling power globally among retail traders as the CAD.
As our second lead editor, Anna C. Mackinno provides guidance on the stories Great Lakes Ledger reporters cover. She has been instrumental in making sure the content on the site is clear and accurate for our readers. If you see a particularly clever title, you can likely thank Anna. Anna received a BA and and MA from Fordham University.