AUDCAD pulls back on profit-taking after reaching five-year high

The AUDCAD pair is poised to close the week near 0.98800, retreating from a five-year high of 0.99300. This appears to be a purely technical pullback, though the fundamental picture keeps adding pressure on quotes.

In April, the Canadian labor market recorded a loss of 17,700 jobs and a rise in unemployment to 6.9%. Despite these unpleasant figures, elevated energy prices continue to provide solid support for the loonie. Minutes from the central bank’s latest meeting signaled officials’ intention to hold interest rates at current levels. However, policymakers did not exclude future hikes in response to surging inflation, triggered by the energy shock. This monetary stance is now limiting the CAD’s further downside.

The Aussie, by contrast, lacks such support. Government budget measures aimed at easing inflationary pressure are currently putting additional strain on the Reserve Bank of Australia (RBA). Mixed data from China, along with capital rotation into equities, has made investors cautious. Another hurdle is struggling gold, which is closely correlated with the AUD. The precious metal is gradually giving up its gains because of rising US Treasury yields. The minutes from the RBA’s latest meeting are due shortly, but the market has already priced them in—the central bank's hawkish lean is hardly a secret. Thus, surprises are unlikely.

On the daily chart, AUDCAD is currently pulling back after hitting a local five-year high on May 13. This milestone triggered active profit-taking. Technical indicators confirm the bearish shift. The Stochastic Indicator has just exited overbought territory and reversed downward, signaling that the upward movement is running on fumes. The Chaikin Oscillator has also been declining since May 13, pointing to shrinking trading volumes and capital outflows.

The pair is likely to consolidate within the 0.98800–0.99000 range, with the next direction becoming clearer on Tuesday. The key catalyst for the coming week will be Canada’s April Consumer Price Index (CPI) report, due May 19. This data could give the loonie an extra boost. 

Take into account the following trading strategy:

Sell AUDCAD near the 0.99000 level, with Take profit at 0.98400 and Stop loss at 0.99300.

The forecast is valid from May 14 till May 21, 2026.