The AUDCAD currency pair started the current week by updating the maximum for 2 months, but quotes failed to hold on these marks. News about the postponement of the US tariffs on Canadian goods helped the national currency to strengthen its position. Nevertheless, this factor did not last long and at 0.895 the price rebounded. The upward movement may continue up to the level of 0.904.
Derek Halpenny of MUFG Bank urges avoiding excessive optimism about Donald Trump's decision to hold off on import tariffs on Canada. In his opinion, in March the situation may change for the worse again. If the duties are still imposed, the Canadian economy risks falling into recession, and the national currency will depreciate by 5% for every 10% tariff rate on imports to the United States.
Besides, Reuters analysts draw attention to the sharp deterioration of business activity in Canada according to the results of January. The corresponding PMI from Ivey fell from 54.7 to its lowest since August at 47.1 points. Today's Canadian labor market report for the first month of 2025 may confirm the negative trend. New jobs are expected to fall from 90 900 to 25 500 and the unemployment rate may have risen from 6.7% to 6.8%.
Meanwhile, the Reserve Bank of Australia (RBA) is close to starting a cycle of interest rate cuts. According to a Bloomberg poll, it will start at the next meeting on February 18. However, Nick Stenner, a former RBA economist, believes the scale of the coming monetary easing is exaggerated. According to his estimates, the Bank will cut the key rate only 3 times as inflation will remain above 2.5% in the coming year. This would bring the RBA's cost of borrowing to 3.6%, continuing to outperform the Bank of Canada.
The Stochastic indicator is close to the oversold zone, indicating a high chance of further upward movement of AUDCAD quotes. The nearest target for the bulls will be the level of 0.904.
Consider the following trading strategy:
Buy AUDCAD at the current price. Take profit — 0.904. Stop-loss — 0.895.
This content is for informational purposes only and is not intended to be investing advice.
