AUDCAD this week showed a strong rebound from the April low set last Friday just below 0.878. Yesterday, the rising quotes faced the opposition of the bears, whose activity increased when the price was trying to consolidate above 0.89. Nevertheless, today the upward trend resumed. Buyers clearly don’t consider the AUDCAD growth potential exhausted, and the next target on their way could be the level of 0.895.
The released inflation data for March supported the Australian dollar's growth. Price growth in the country slowed from 4.1% to 3.6%, but it didn’t meet experts' expectations of 3.4%. Moreover, the core inflation rate remained above the 4% mark. ING analyst Francesco Pezole drew attention to the changed forecast of the Reserve Bank of Australia’s monetary policy. Now market participants don’t expect the key rate cut in the country at least until December, which will support the rate of national currency.
At the same time, the officials of the Bank of Canada are aiming for the first easing in summer. The published minutes of the meeting held on April 10 show the regulator's confidence in easing inflationary pressures. Price growth in the country has slowed to lows of mid-2021, and a June 5 rate cut looks like a prudent move. In the extreme case, it’s possible to reschedule it to July, but no more than that.
Fresh economic statistics also pushed the Bank of Canada to a more dovish rhetoric. The country's retail sales fell 0.3%, showing a decline for the second consecutive month, while analysts had forecast a 0.1% increase. Robert Kavcic, senior economist at BMO Capital Markets, noted strong pressure on consumer demand from high interest rates. According to him, if the data for April again show a decline in inflation, the Canadian regulator will no longer have obstacles to ease monetary policy in June.
The Stochastic indicator on the daily chart of AUDCAD presents a bullish signal, and there’s still room for growth before entering the overbought zone. The 0.895 mark looks like an achievable target before the correction starts.
The following trading strategy can be suggested:
Buy AUDCAD at the current price. Take profit — 0.895. Stop loss — 0.889.
This content is for informational purposes only and is not intended to be investing advice.
