Invest in AUDCAD up to 0.9900

AUDCAD has been one of the most interesting pairs to watch this week. It is now carving out a steady uptrend, with room to run toward the 0.9900–0.9950 zone. What's fueling the fire? A yawning gap between the Reserve Bank of Australia's hawkish resolve and the Bank of Canada's dovish hesitation—a policy chasm that keeps the Aussie firmly in the driver's seat.

Let's start with the Australian side. Down under, the RBA is throwing its weight behind the currency. The 3.6% core trimmed mean inflation reading has already prompted the regulator to raise interest rates three times this year, bringing the benchmark to 4.35%—and there is more to come. Comments from Deputy Governor Andrew Houser and major forecasters like Westpac suggest that the tightening cycle has some gas left in the tank. Markets are pricing in a strong shot of another 25‑basis‑point hike to 4.60% at the next meeting. The central bank has been blunt, stating that the economy is still "overheated", so the 2%–3% target won't be reached until late 2028. This slams the door on any near‑term monetary easing, turning the Aussie into a compelling buy.

In the meantime, north of the border, the loonie is fighting an uphill battle. The Bank of Canada has rates stuck at 2.25%, while the core Consumer Price Index (CPI) has eased to a comfortable 2.1%, giving Governor Tiff Macklem plenty of breathing room to keep policy accommodative. His approach is a cautious "first, do no harm"—and for good reason. The national economy is flirting with a technical recession, and the recent US decision not to renew the CUSMA (USMCA) agreement has thrown a dark cloud over the country's trade outlook. To make matters worse, not even a temporary spike in oil prices, driven by Middle East tensions, has been enough to lift the loonie. Unsurprisingly, analysts are all singing the same tune: the BoC will stand pat at its upcoming meeting, leaving it trailing further behind Australia's yield advantage.

The ultimate recommendation is to buy the AUDCAD pair. Lock in profits at 0.9900. Place Stop Loss at 0.9797.

Calculate your open position so that a potential loss (protected by a Stop Loss order) is limited to 1% of your deposit. If your account balance does not allow you to enter a position of this size, it is better to skip the trade and wait for other market signals that meet low-risk criteria.