The AUDCAD pair has changed its direction

31 August 2023 170
The AUDCAD pair has changed its direction

On Thursday, the AUDCAD pair strengthened after the release of stronger national economic data and encouraging news from China.

China's Purchasing Managers' Index (PMI) for August was above expectations. Furthermore, the National Bank of China promised to provide additional support to businesses and real estate developers.


In Australia, corporate investment rose by 2.8% in the second quarter, compared to the first one, and reached its highest level since late 2015.


Next week’s data is expected to show that Australia's economic growth slowed to 2% in the second quarter. This is due to a reduction in consumer spending amid high inflation and rising borrowing costs.


This slowdown remains the main reason why the market believes the Reserve Bank of Australia (RBA) will keep its key interest rate at 4.1% at its meeting on September 5th.


On Tuesday, the Reserve Bank of Australia Deputy Governor Michele Bullock warned that an additional interest rate hike may be needed to curb inflation. Nevertheless, the bank's management is carefully analyzing the data to make decisions on a monthly basis.


In September, Bullock will take over as a Chairman of the Central Bank. According to her, fighting high inflation in Australia will be her main task.


At the same time, according to most Reuters economists, the Bank of Canada is expected to keep its key interest rate at 5.00% at its meeting on September 6th and remain at that level until at least the end of March 2024.


The Bank of Canada is aiming to keep inflation at 2%. However, the consumer price index(CPI) rose at a faster pace in July, reaching 3.3%. High inflation could have a negative impact on the Canadian dollar.


The AUDCAD currency pair has breached the downtrend on the H4 timeframe.


In terms of wave analysis, the price is in the formation of the third upward wave on the H2 timeframe. The top of the first wave at 0.8770 has already been broken. The upward movement may intensify in the near term.


Signal:

The short-term outlook for AUDCAD is to buy.

The target is at the level of 0.8890.

Part of the profit should be fixed around the level of 0.8820.

Stop-loss is placed at 0.8695.

 

The bullish trend is short-lived, so choose a trading volume of no more than 2% of your balance.

 

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

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