At the beginning of the week the AUDCAD currency pair updated a 3-month high, and then moved to correction. Yesterday, the decline intensified, but the quotes were supported by the medium-term uptrend line. The bears' activity may decline near the level of 0.9, while the buyers of the Australian dollar will have an opportunity to regain their lost positions. In this scenario, AUDCAD could recover to 0.911 over the coming weeks.
Yesterday's collapse of the Australian currency was driven by the labor market report for February. Last month, the number of jobs in the country's economy dropped by almost 53,000 against an expected increase of 30,800. However, the unemployment rate remained unchanged at 4.1%. This excludes a sharp deterioration in the Australian labor market, Reuters analysts reported. Moreover, the situation may change significantly ahead of May.
Parliamentary elections will be held in Australia in late spring. Experts polled by Bloomberg expect pre-election promises of large budget expenditures, especially from the current authorities. They have already approved $22 billion in additional spending since the beginning of the year. Such actions could provide strong support for the country's economy, but at the same time hinder the Reserve Bank of Australia's (RBA) efforts to curb inflation.
According to current market forecasts, the RBA will avoid cutting rates at its meeting on April 1 and rather wait until May 20, when the election results are known. Meanwhile, the Bank of Canada officials will meet on April 16, and the probability of monetary policy easing is much higher in this case. In yesterday's speech, the head of the regulator, Tiff Macklem, admitted that a new economic crisis in Canada is possible due to the imposition of import tariffs by the United States. This threatens to weaken the national currency.
While the AUDCAD quotes have not consolidated below the trend line, the main scenario suggests the price rebound. The bulls may target the level of 0.911.
Consider the following trading strategy:
Buy AUDCAD above the level of 0.9. Take profit — 0.911. Stop loss — 0.897.
This content is for informational purposes only and is not intended to be investing advice.
