The AUDCAD currency pair has made the second attempt of trend reversal in the last few weeks. Australian and Canadian regulators kept key rates unchanged at their meetings this week.
The weakness of the Canadian dollar is mainly caused by the decline in oil prices over the last trading sessions.
The correction of the oil price is quite logical after the rapid growth on positive news. Its decline will put additional pressure on the Canadian currency.
The Brent oil price may fall again to the level of $71–72 per barrel in the next six months against the background of weakening demand in Europe and the United States and uncertainty about consumption in China. This was stated by representatives of Gunvor Group.
According to the head of research Frederic Lassere, the outlook for global demand remains "bearish".
In contrast to Gunvor Group's position, Trafigura's co-head of oil trading, Ben Luckock, said that the $72 to $88 per barrel range is the fair price for oil.
Lacock said at the APPEC that the likelihood of further interest rate hikes by the Federal Reserve (Fed) remains high. However, this should not seriously harm the US economy.
According to the Bank of Canada, recent data shows that higher interest rates are slowing the economy. However, the regulator's policy should be tight enough to keep inflation in check.
Officials are concerned about the sustainability and magnitude of inflation. They see a weakening labor market in Canada. However, the pressure on wages is not easing yet.
Though officials say demand has fallen significantly and corporate price-setting behavior is normalizing, the Bank of Canada governor Tiff Macklem maintained a hawkish stance.
Macklem’s comments — combined with Wednesday’s pause — suggest policymakers may be nearing a terminal point for rates. The next move will be a cut by the middle of next year.
Doubts about a further rate hike are also putting pressure on the Canadian dollar.
According to the technical analysis, the AUDCAD currency pair is forming a wave for further strengthening of the Australian dollar. With the support of fundamental factors, this trend may continue in the near future.
The growth target will be the Fibonacci level of 0.236 from the entire correction wave from the beginning of the year, which corresponds to the price of 0.883. A Stop-loss should be placed at the decline below today’s low. It corresponds to the level of 0.871.
Growth of the AUDCAD currency pair:
Take profit — 0.883
Stop-loss — 0.871