The AUDCAD currency pair is in a broad correction due to similar monetary policies of the Bank of Canada and the Reserve Bank of Australia. Central banks raise interest rates throughout the year to lower inflation.
According to Statistics Canada, annual consumer prices in the country rose to 3.3% in July. Against this background, the Canadian currency lost value.
The increase followed a drop in inflation to 2.8% in June for the first time since March 2021, well within the Bank of Canada's target range of 1% to 3%.
The latest rise in inflation was due to higher gasoline prices compared to a year ago, as the Federal Agency stated.
Meanwhile, food prices increased by 8.5% year-on-year, at a slower pace than in June. This was mostly caused by a smaller rise in prices for fruits and bakery products.
The Bank of Canada expects inflation to maintain at around 3% during the following year and gradually decline to 2% by the mid-2025.
In another part of the world, the labor sector data will be released tomorrow. The employment rate in Australia is expected to fall to 15,000 from the previous level of 32,600. These statistics measure the absolute change in the number of officially employed workers (full-time and part-time) in the country over a given period of time. Confirmation of the outlook might decline the Australian currency. The data will be published on August 17 at 01:30 GMT.
The AUDCAD currency pair is forming a downward correction channel on the H4 timeframe.
In terms of wave analysis, the price is in the formation of the third descending wave on the H1 timeframe. Breaking through the top of the first wave at 0.8710 has already occurred. The downward movement might strengthen in the near term.
Signal:
The short-term outlook for the AUDCAD pair suggests selling.
The target is at the level of 0.8600.
Part of the profit should be taken near 0.8670.
The Stop-loss is set at 0.8800.
Bearish trend has a short-term character, so the trade volume should not be more than 2% of your balance.
This content is for informational purposes only and is not intended to be investing advice.
