AUDCAD half-year low attracted the attention of buyers

23 May 2023 158
AUDCAD half-year low attracted the attention of buyers

AUDCAD currency pair has renewed the half-year low, having failed to reach the level of 0.89. Probably, the achievement of such low levels together with the oversold condition of the technical indicators led to the activation of the buyers of the Australian dollar. As a result, there was a fairly strong rebound upward, with some moments of price rising above the 0.9 level. Further, the bulls have taken profits, but the potential to continue the rise at least to the level of 0.903 still remains.

 

Today S&P Global published preliminary PMI indexes for the Australian economy. Business activity in the industrial sector remained unchanged from April (48 points), which is better than the expected decline to 47.3 points. In turn, activity in the service sector slightly decreased (PMI fell from 53.7 to 51.8), but this result also exceeded the market forecast of 48.9 points.

 

The continued good economic growth may allow the Reserve Bank of Australia to raise interest rates more, or at least avoid a rapid easing of monetary policy At the same time, for the Bank of Canada, the question of raising rates against the background of current economic problems is probably no longer relevant.

 

The situation with forest fires in the province of Alberta has already led to a shutdown of daily oil and gas production of about 240-300 thousand barrels of oil equivalent. The problems with hydrocarbon production are beginning to affect the worsening of the economic forecast for Canada. According to ATB Financial estimates, the fires could cause cuts of the national real GDP by 0.1-0.3% this month.

 

As long as AUDCAD is above the level of 0.893, the local rise has all chances to continue. The return to the level of 0.9 will be the first target for buyers, and then it might be possible to move to the level of 0.903. The Stochastic indicator gave a buy signal and increases the probability of the Australian dollar rise in price against the Canadian currency.

 

 

The following trading strategy option can be suggested:

 

Buy AUDCAD at the current price. Take profit 1 – 0.9. Take profit 2 – 0.903. Stop loss – 0.893.

 

Also, traders may use Trailing stop instead of a fixed Stop loss at their convenience.

This content is for informational purposes only and is not intended to be investing advice.

error
More
Comments
New Popular
Send
Commenting rules