Trade tariff uncertainty reinforces AUDCAD downtrend

The AUDCAD currency pair is holding near the high of yesterday’s trading session amid positive data from China, Australia’s main trading partner. In the fourth quarter of 2024, China’s gross domestic product (GDP) rose by 5.4% year-on-year, exceeding market’s expectations of 4% and the previous result of 4.6%. On a quarterly basis, GDP increased by 1.6%, meeting the forecasts.

The unemployment rate in Australia rose to 4.0% from 3.9% in November, matching analysts' expectations. The employment rate increased by 56 300, significantly exceeding the forecast of 15 000. According to Bjorn Jarvis of the Australian Bureau of Statistics (ABS), the labor force participation rate has reached a record at 64.5%. It indicates steady recovery of the labor market after the COVID-19 pandemic. 

The Canadian dollar is under pressure amid expectations of trade tariffs being imposed by US President-elect Donald Trump. The Bank of Canada announced it will end its quantitative tightening program in 2025, with no plans to move to quantitative easing in the near future. According to the survey conducted by Reuters, the Canadian regulator is expected to cut the interest rate by 25 basis points to 3.00% at its meeting on January 29. However, further prospects remain unclear due to possible trade policy changes. 

From the technical point of view, the daily chart (D1) for AUDCAD shows the formation of a new downtrend after exiting a long-term uptrend. A clear downtrend is emerging on the H6 chart, where price is approaching channel resistance. A pullback from this line will create conditions for reinforcing the descending movement and for strengthening sales. The Relative Strength Index (RSI, standard settings) is approaching the oversold area, confirming the likelihood of further decline.  

Short-term prospects for the AUDCAD currency pair suggest selling with the target of 0.8785. Part of the profit should be taken near the level of 0.8880. A Stop loss could be set at 0.9030.

Since the bearish trend is short-term, the trading volume should not exceed 2% of your total balance to reduce risks.