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The minor dollar pairs are USD/CAD (the U.S. dollar versus the Canadian dollar), AUDD/USD (the Australian dollar versus the U.S. dollar), and NZD/USD (the New Zealand dollar versus the U.S. dollar). The minor currency pairs are also commonly referred to as the commonwealth currencies or the commodity currencies.

Commonwealth refers to the commonwealth of former colonies of the United Kingdom. The commodity currencies nickname stems from the key role that oil, metals, and mining industries play in the national economies of Canada, Australia, and New Zealand.

The minor currency pairs each account for around 5 percent of global daily trading volume. But they can offer significant trading opportunities, both for short-term traders and medium- to longer-term speculators.

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The Canadian dollar (nicknamed the Loonie, after the local bird pictured on domestic currency notes) trades according to the same macroeconomic fundamentals as most other major currencies. That means you’ll need to closely follow Bank of Canada (BOC) monetary-policy developments, current economic data, inflation readings, and political goings-on, just as you would any of the other majors.

A key element to keep in mind when looking at USD/CAD is that the trajectory of the Canadian economy is closely linked to the overall direction of the U.S. economy. The United States and Canada are still each other’s largest commercial trading partners, and the vast majority of Canadians live within 100 miles of the U.S. / Canadian border. Even the BOC regularly refers to the U.S. economic outlook in its forecasts of Canadian economic prospects. So we don’t think it’s an overgeneralization to say that as goes the U.S. economy, so goes the Canadian economy. But it’s a long-term dynamic, making for plenty of short-term trading opportunities.

The relationship between the U.S. and Canadian economies is constantly evolving. The heightened demand for natural resources from China and other rapidly developing economies, for example, potentially supplants U.S. demand with overall global growth. In this light, be sure to factor in the global economic outlook when evaluating the Canadian outlook.

Geography also plays a role when it comes to U.S. and Canadian economic data, because both countries typically issue economic data reports around the same time each morning or only a few hours apart. At one extreme, the result can be a negative USD report paired with strong Canadian data, leading to a sharp drop in USD/CAD (selling USD and buying CAD). At the other end, strong U.S. data and weak Canadian numbers can see USD/CAD rally sharply. Mixed readings can see a stalemate, but it always depends on the bigger picture.

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The standard market convention is to quote USD/CAD in terms of the number of Canadian dollars per USD. A USD/CAD rate of 1.2200, for instance, means it takes CAD 1.22 to buy USD 1. The market convention means that USD/CAD trades in the same overall direction of the USD, with a higher USD/CAD rate reflecting a stronger USD / weaker CAD and a lower rate showing a weaker USD / stronger CAD.

USD/CAD has the USD as the primary currency and the CAD as the counter currency. This means

• USD/CAD is traded in amounts denominated in USD. For online currency trading platforms, standard lot sizes are USD 100,000, and mini lot sizes are USD 10,000.

• The pip value, or minimum price fluctuation, is denominated in CAD.

• Profit and loss register in CAD. For a standard lot position size, each pip is worth CAD 10, and each pip in a mini-lot position is worth CAD 1. Using a USD/CAD rate of 1.1800 (which will change over time, of course), that equates to a pip value of USD 8.47 for each standard lot and USD 0.85 for each mini-lot.

• Margin calculations are typically based in USD, so to see how much margin is required to hold a position in USD/CAD it’s a simple calculation using the leverage ratio. At 100:1 leverage, for instance, $1,000 of available margin is needed to trade 100,000 USD/CAD, and $100 is needed to trade 10,000 USD/CAD.

USD/CAD is unique among currency pairs in that it trades for spot settlement only one day beyond the trade date, as opposed to the normal two days for all other currency pairs. The difference is due to the fact that New York and Toronto, the two nations’ financial centers, are in the same time zone, allowing for faster trade confirmations and settlement transfers. For spot traders, the difference means that USD/CAD undergoes the extended weekend (three-day) rollover after the close of trading on Thursdays, instead of on Wednesdays like all other pairs, assuming no holidays are involved.

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On top of following U.S. economic data to maintain an outlook for the larger economy to the south, you’ll need to pay close attention to individual Canadian economic data and official commentaries. CAD can react explosively when data or events come in out of line with expectations. In particular, keep an eye on the following Canadian economic events and reports:

• Bank of Canada speakers, rate decisions, and economic forecasts

• Employment report

• Gross domestic product (GDP) reported monthly

• International securities transactions

• International merchandise trade

• Leading economic indicators

• Wholesale and retail sales

• Consumer price index (CPI) and BOC CPI

• Manufacturing shipments

• Ivey Purchasing Managers Index