AUDCAD currency pair continues to form a downtrend

08 August 2023 159
AUDCAD currency pair continues to form a downtrend

The AUDCAD currency pair price is in a broad correction.

 

Macroeconomic indicators of Australia's main trading partner disappoint investors.  

 

China's trade data fell in July much more than expected. Statistics released on Tuesday showed a 12.4% year-on-year drop in imports, while exports fell by 14.5%. This is another sign of the country's fragile economic recovery. Against this backdrop, the yuan fell to a more than two-week low. At the same time, the Australian dollar weakened by 0.38%.  

 

According to Carol Kong, a currency strategist at Commonwealth Bank of Australia, these volatile export and import figures simply emphasize the weak external and domestic demand in the Chinese economy. China's national bank has reached a point where weak indicators only reinforce calls for further policy support, Kong added.

 

This rapid decline corrected slightly in the morning session as the National Australia Bank business confidence index rose 2 points. The index combines a host of macroeconomic indicators that reflect the current state and future prospects of the business sector in the country. It is one of the earliest indicators for assessing the economic situation, so its role as a leading indicator is particularly important. Business confidence data are used to forecast inventory levels (both raw materials and finished goods), prices, headcount and other aspects.

 

Canada releases trade balance statistics today. According to forecasts, the balance deficit is expected to decrease to -2.9 billion from the previous value of -3.44 billion. If the actual data meets expectations, the Canadian currency strengthens. The news is expected at 12:30 GMT.

 

The AUDCAD price is in a broad downward correction on the H4 timeframe.

 

In terms of wave analysis, the price is forming the third descending wave. The breakout of the first wave at 0.8745 has already taken place. The downward movement may intensify in the near term.

 

Signal:

The short-term outlook for the AUDCAD pair is to sell.

The target is at the level of 0.8600.

Part of the profit should be fixed near the level of 0.8685.

A Stop-loss should be placed at 0.8880.

 

The bearish trend is of a short-term nature, so it is suggested to limit the trading volume to no more than 2% of your capital.

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

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