Break of 0.9 level will send AUDCAD to August lows

On Wednesday, AUDCAD showed a sharp decline to its September lows, coming close to 0.9. During Thursday's trading session, the buyers tried to take the initiative, but they were only enough for a small rebound. Today the quotes resumed the downward trend. The bears are preparing to test the 0.9 level again, and if they are successful, they may target 0.897, where AUDCAD was in early August.

The collapse of the Australian dollar began after the release of the country's Q3 GDP data. The country's economy grew just 0.3% quarter-on-quarter and 0.8% year-on-year, missing market forecasts of 0.5% and 1.1% respectively. The actual performance was the worst since 2020. Moreover, the Australian Bureau of Statistics (ABS) estimated that almost all of the GDP increase was due to government spending, while the contribution from private businesses and households was almost zero.

Against this backdrop, traders shifted expectations for the Reserve Bank of Australia's (RBA) first interest rate cut from May to April 2025. There were also more calls for an easing in February, although the odds of this happening remain low. Shane Oliver, chief economist at AMP, maintained his forecast for a May rate cut, but highlighted the increased odds of an earlier move by the RBA. Officials may point to this scenario at the end of the December 10 meeting.

The day after the RBA meeting, the Bank of Canada will deliver its verdict on the level of interest rates. In recent days, market participants have revised their estimates and no longer expect a repeat of October's 0.5% move. This time the Canadian regulator will limit itself to a standard rate cut of 0.25%. According to Reuters analysts, Bank of Canada officials will prefer to wait until Donald Trump takes office as U.S. president on January 20 before reacting to his promises of 25% tariffs on imports of Canadian goods.

A breakdown below the 0.9 level will provide AUDCAD sellers with significant potential for further downward price movement. The 0.897 mark will be the next target.

Consider the following trading strategy:

Sell AUDCAD at the current price. Take profit — 0.897. Stop loss — 0.907.