As the global economy is teetering on the edge of recession, central banks are hiking interest rates, and the dollar is strengthening, currency pairs are experiencing an impact from all these factors.
A series of important US economic indicators are expected to be released this week, including a key inflation gauge, information on durable goods orders, and the University of Michigan's consumer sentiment index. In addition, US Central Bank Chairman Jerome Powell may shed light on further Fed rate levels in his midweek speech.
Earlier this week, Federal Reserve Bank of New York President John Williams stressed the importance of restoring price stability. At the same time, he believes that monetary tightening could lead to undesirable economic consequences.
Investors now expect a rate hike in July with a 74% probability, while a rate cut is expected since 2024.
Against this background, the Canadian dollar correlated with the US currency and rose in value.
Today at 12:30 GMT, Canada's core consumer price index will be published. This index is a gauge of consumer inflation. The index is projected to fall to 3.9% year-on-year. If the forecast proves to be correct, the Canadian dollar is likely to rise in value in the short term.
Tomorrow, inflation figures for Australia are due to be released. Their actual values will determine Australia's monetary policy for the coming month.
Australia is one of the leading developed countries in the mining industry. Australia holds an important position on the global stage thanks to its vast reserves and advanced technological development in the sector. Therefore, news of the sector has a direct impact on the value of the Australian dollar.
The AUDCAD pair is in a downtrend on the H4 timeframe. Sell trades should be considered within this channel.
The short-term prospects for the AUDCAD pair are to sell around the level of 0.8830.
The target is at the level of 0.8770.
Part of the profit should be fixed near the level of 0.8800.
A stop-loss is at the level of 0.8875.
"Bearish" trend has a short-term nature, so the trade volume is better not exceed 2% of your balance.