AUDCAD gains on technical bounce and improved sentiment in commodity markets

Today, July 18, AUDCAD opened at 0.89029, showing strength after a technical bounce off the lower boundary of the ascending channel it's been trading in.

In recent days, prices have also found support from improving sentiment in commodity markets, fueled by renewed hopes for economic stimulus in China. The country’s record-high iron ore imports in June, along with new government measures to support construction activity, have boosted demand for Australian commodities, driving the AUD higher.

Australia’s macroeconomic data remains weak: the unemployment rate rose to 4.3% in June, its highest since 2021, while payrolls expanded by a mere 2,000, well below the anticipated 20,000. This is putting additional pressure on the Aussie and reinforcing expectations that the Reserve Bank of Australia (RBA) will cut interest rates as early as August. That said, the current bounce within the channel is providing temporary support for the AUD, offsetting some of the negative fundamentals.

Canada’s economic outlook remains relatively stable but mixed. Inflation accelerated to 1.9% year-over-year in June, driven by rising prices for cars, furniture, and airfare due to US tariffs and supply chain disruptions. The Bank of Canada will likely keep rates steady despite external pressures. The loonie is drawing some support from firmer oil prices, buoyed by shrinking inventories and geopolitical risks. However, plans by major oil producers to unwind output cuts could boost supply, capping the CAD’s upside potential.

Technically, AUDCAD is trading within an upward channel on the 4H chart, with the current rally stemming from a bounce off the lower boundary. While there’s optimism around improved commodity demand and China’s stimulus measures, fundamental risks remain significant.

Current recommendation: 

Buy in the range of 0.89360–0.89120. Take profit – 0.89800. Stop loss – 0.89050.