Buying AUDCAD with 1.0000 in sight

AUDCAD keeps confidently climbing, supported by a sharp monetary divergence between the two central banks.

The fundamental picture highlights the Australian dollar’s remaining growth potential against its Canadian counterpart. What continues to push it higher? The answer is straightforward: the same old policy gap. With core inflation sitting firmly at 3.6% and oil prices steadily rising, consensus among Australia’s largest banks (CBA, NAB, and ANZ) has recently shifted toward a rate hike to 4.60% at the upcoming meeting on September 29. RBA Governor Michele Bullock’s rhetoric regarding materializing inflation risks rules out any policy easing before the end of 2027.

Now, let’s turn to the Bank of Canada. The regulator held borrowing costs at 2.25%. Despite high energy prices—which typically support the country’s economy—BoC Governor Tiff Macklem finds himself caught in a vise of reciprocal 50% tariffs with the US, imposed this month. The threat of a recession, combined with slowing hiring and investment inflows caused by the trade war, forces the national regulator to adopt a wait-and-see approach.

Usually, expensive crude oil—now sitting above $100 per barrel—is favorable for both currencies. But conditions have changed, and this factor is now playing out asymmetrically. For Australia, high energy prices have recently acted as a pro-inflationary domestic shock, pushing the RBA toward raising interest rates. As for Canada, the positive impact of expensive fuel is entirely offset by the economic damage caused by American tariffs, depriving the loonie of support from the commodity market.

Given this monetary disparity between the RBA (4.60%) and the BoC (2.25%), buying AUDCAD could be a smart move in the medium term. During October-November, a test and a subsequent breakout of the 1.0000 level are expected.

The overall recommendation is to buy AUDCAD. Profits should be taken at 1.0000. Stop Loss could be set at 0.9950.

The volume of the open position should be calculated so that the potential loss (protected by a Stop Loss order) does not exceed 1% of your deposit. If your account balance does not allow opening a position of this size, it is better to avoid entering the market on this signal and wait for other trade options that meet low-risk criteria.