The AUDCAD currency pair technically reacts to fundamentals.
At the end of last week Statistics Canada released macroeconomic data. The country's gross domestic product (GDP) in April 2023 remained at 0%, compared to the previous month, when the indicator rose by 0.1%.
In contrast to February 2022, GDP increased by 1.7% to 2.085 trillion Canadian dollars year-over-year.
April's industrial production slowed down from 0.3% to 0.1% compared to March. Retail trade turnover rose by 0.2% after falling by 1.1% a month earlier. Wholesale trade turnover accelerated its decline from 1.4% in March to 1.2%. Construction volume rose by 0.4%. Against this backdrop, the Canadian dollar dropped.
Today's TD Securities inflation data for Australia fell to 0.1%. This indicator is the equivalent of the national government's quarterly consumer price index.
At the same time, investment loans for house construction jumped by 6.2%. This figure shows the amount of long-term loans for residential construction. The increase in the number of initiated construction projects indicates a revival in consumer demand and business optimism, which in turn demonstrate a rise in the residential real estate market and the country’s economy in general. Against this background, the Australian currency went up.
The Reserve Bank of Australia will decide on its interest rate tomorrow at 4:30 GMT. It is projected to rise to 4.35% to curb high inflation. Expectations of a rate hike might support the Australian dollar.
The AUDCAD quotes broke out of the downtrend on the H1 timeframe. This technical component indicates the beginning of a new trend and a new series of waves formation.
The price is in the formation of the first ascending wave. Whether the current wave’s formation is at its final stage or not is yet unclear. However, the fundamental potential of a bullish move is high.
The short-term outlook for the AUDCAD pair suggests buying.
The target is at the level of 0.8920.
Part of the profit should be taken near 0.8870.
The Stop-loss is set at 0.8750.
Bullish trend has a short-term character, so the trade volume should not be more than 2% of your balance.