The global economy is on the verge of a recession, inflation remains high in many countries, and central banks change interest rates. All these factors affect currency pairs.
Major central banks are now adjusting their monetary policies. Some are raising rates, some are pausing, said Brad Bechtel, global head of foreign exchange at Jefferies.
Thus, the Reserve Bank of Australia decided on Tuesday to leave its key interest rate unchanged at 4.1%. This is the highest level since early 2012.
The RBA’s decision was quite unexpected for analysts, as most of them had awaited a 25-basis-point rate hike.
The Australian regulator raised the borrowing cost by 25 basis points at the latest meeting. Since May 2022 it has increased rates by a total of 400 basis points.
Central bank officials reported the need for a pause in interest rate increases to assess the impact of previous hikes on the economy as inflation in Australia declined to 5.6% in May.
A number of labor market indices are published in the U.S. and Canada today. The main one in this case is Canadian statistics.
According to forecasts, the number of employed in the country should increase to 20,000. A confirmation of this forecast should be positive for the Canadian dollar (CAD). At the same time, the unemployment rate is likely to rise by 5.3%, which is a negative factor.
The AUDCAD currency pair is in the formation of the upward correction channel on the H2 timeframe. The release of the Canadian statistics might break the prices out of the rising trend.
In terms of wave analysis, the price is in the formation of the second ascending wave.
The Relative Strength Index (standard values) demonstrates divergence in building peaks, which gives a leading signal for the probability of a change in the trend.
Fundamental and technical data indicate the possibility of changing the second ascending wave to the third descending one. The nearest support is at the level of 0.8825.
The short-term outlook for AUDCAD suggests selling.
The target is at the level of 0.8760.
Part of the profit should be taken near 0.8825.
The Stop-loss is set at 0.8940.
Bearish trend has a short-term character, so the trade volume should not be more than 2% of your balance.