The AUDCAD pair is forming a descending correction corridor

23 August 2023 172
The AUDCAD pair is forming a descending correction corridor

The AUDCAD currency pair is undergoing a significant correction caused by the similar monetary policies of the Bank of Canada and the Reserve Bank of Canada. Both of these banks have been consistently rising interest rates during this year in order to fight inflation.

The RBA's cash rate is 4.1%. The Bank of Canada's latest interest rate decision was 5.0%.


Meanwhile, investors are waiting for comments from leading central bankers on the direction of interest rates.


The annual Jackson Hole Symposium, to be held this week in the state of Wyoming, is supposed to give signals to markets about regulators' monetary outlook. The speech from Federal Reserve (Fed) Chairman Jerome Powell on Friday is of particular interest to traders.


According to Garshal Barot, senior consultant at Metals Focus, Powell's comments will help determine the Fed's position on the 2% inflation target and the urgency of revising it. If Powell hints at raising the target, it could mean that no rate hike is needed, Barot added.


The speech of the head of the American regulator may change the value of the Canadian currency in correlation with the U.S. dollar.

Today, Statistics Canada will publish data on the core retail sales. This indicator measures the volume of sales of goods and services to final consumers over a certain period of time. According to forecasts, basic retail sales for the month should increase to 0.3%. Confirmation of the forecast may provide support for the Canadian Dollar (CAD). The news will be published at 15:30 GMT. 


The AUDCAD currency pair quotes are in the process of forming a downward correction corridor on the H4 timeframe.


In terms of wave analysis, the price is in the formation of the third descending wave on the H2 timeframe. The breakthrough of the top of the first wave at 0.8710 has already taken place. The downward movement may strengthen in the near term.

 

Signal:

The Short-term prospects for AUDCAD are selling.

The Target is at the level of 0,8590.

Part of the profit should be fixed around the level of 0,8650

Stop-loss is placed at 0.8800

 

The bearish 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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