AUDCAD is still unable to break out of the descending channel

The AUDCAD currency pair, as expected, continues to move within the descending channel, getting closer to the low of August and the level of 0.885. In the first days of 2025, the buyers tried to take the initiative, but above 0.898 their activity quickly came to naught. Against this backdrop local impulses of quotation growth provide a suitable condition for opening short positions in expectation of further weakening of the Australian dollar against its Canadian counterpart.

According to the statistics of the U.S. Commodity Futures Trading Commission (CFTC), by the end of 2024, the Australian currency sentiment became the most bearish since March 2022. Traders’ total short position has almost reached 38,000 contracts and the trend shows no sign of abating in January. Con Davelis of National Australia Bank Ltd. fears that if the current market sentiment continues, the Australian dollar could fall to the 2020 lows (for AUDCAD it is the level of 0.8).

Australian currency sales intensified yesterday, when the country's statistical authorities released data on retail sales for November. The indicator rose by 0.8%, failing to meet forecasts of 1%. At the same time, the figure for October was revised downward (from 0.6% to 0.5%), which increased market’s pessimism. The consensus suggests the February rate cut by the Reserve Bank of Australia. The chances of such a move are estimated to be 70%. Previously, the easing of monetary policy was expected only in spring.

At the same time, according to the Reuters poll, the Canadian dollar forecasts are positive. This currency may strengthen against the U.S. dollar by 0.5% in the first quarter of 2025, and by the end of the year it could rise by more than 3%. Strengthening against weaker currencies could be even greater. Concerns over Donald Trump's import tariffs have already been factored into the Canadian dollar’s value, and the imminent resignation of unpopular Prime Minister Justin Trudeau is viewed favorably by analysts.

The Stochastic indicator is once again giving a sell signal for AUDCAD. The nearest target for the bears will be a return to the level of 0.889.

The following trading strategy can be suggested:

Sell AUDCAD in the range of 0.892–0.894. Take profit — 0.889. Stop loss — 0.898.