AUDCAD rises at the end of June amid easing Middle East tensions and waning concerns over oil supply disruptions. Friday's opening price was at 0.89248.
The key factor contributing to the growth of AUDCAD was the improving market sentiment amid declining geopolitical risks. With no more threats to crude supplies, energy markets got less volatile, boosting Australia's economy, which depends on raw material imports. At the same time, Canada, an oil exporter, saw weaker demand for its currency as concerns about raw material shortages eased.
Canada's situation is exacerbated by domestic economic problems. April GDP is expected to show zero growth, continuing the trend of slowing economic activity in the country. Current statistics suggest that the economy is cooling. Markets believe there is a 45% probability that the Bank of Canada will ease monetary policy at its next meeting.
At the same time, Australia saw a pickup in June's business activity (the S&P Global index rose to 51.2), supported by higher demand in the services sector, even though exports dropped to a record low because of trade tensions. The labor market remains resilient, but the decline in job vacancies is increasing pressure on the Reserve Bank of Australia (RBA). Traders are almost 90% confident that the regulator will cut rates in July, which could put additional pressure on AUD, but the pair's current dynamics indicate that factors related to the weakening of CAD prevail.
Technically, the market is in an uptrend after a recent decline. The Stochastic Oscillator is rising, with the K% line crossing the D% line from below, yet it is approaching the overbought zone, increasing the risk of a correction.
The current strengthening of the pair indicates the formation of an uptrend, which may gain momentum after the release of Canada's GDP data and the RBA's interest rate decision. The nearest targets are to test the upper boundary of the channel at 0.89605 with the potential to rise to 0.90000 if resistance is broken.
Current recommendation
Buying at the current price. Take profit — 0.90000. Stop loss — 0.88900.
This content is for informational purposes only and is not intended to be investing advice.
