Foreign exchange rate
FX rate
What it is
Price of one currency in another. USD/CAD at 1.35 means 1.35 CAD buys 1 USD. Major pairs (EUR/USD, USD/JPY, GBP/USD, USD/CAD) represent most global FX volume.
How to read it
FX rates reflect growth, inflation and monetary policy differentials between countries. For a Canadian, USD/CAD rising = USD purchasing power down = US stocks more expensive in CAD. Reverse effect for Canadian exporters to the US.
Common reference points
- Compare to 3-5 year historical average—
Orders of magnitude, not a rule: the same number does not mean the same thing from one sector to the next.
What it does not tell you
FX is extremely noisy short-term — speculative flows, carry trade positioning, occasional central bank intervention. Watch in multi-month trends, not daily moves.
Other measures — FX
Educational content. Polaris is not a registered investment adviser and makes no recommendation.