AUDCAD is still stuck in its range, which has been holding for the past few months already. The pair got rejected on the spike down to support and might be headed back for the top, but it seems that another test of the range bottom might take place.
RSI is moving up, suggesting that price could move back to the resistance at the .9700 major psychological mark. Stochastic is in the middle, which reflects indecision, so price might head either way.
The 100 SMA is above the longer-term 200 SMA so the path of least resistance is to the upside. Stronger buying momentum might even lead to an upside break of resistance, but this depends on the market catalysts lined up. A breakout in either direction could last by around 300 pips or the same size as the rectangle pattern.
AUDCAD Fundamental Factors
Oil prices have been pushing the Canadian dollar around these days, although the Aussie is being weighed down by the downturn in the Chinese economy. Asian equities were mostly weaker yesterday but there was a significant rebound during the European and US trading sessions, signalling that risk appetite might strengthen.
The rebound was spurred by the Chinese central bank’s decision to cut interest rates in order to spur demand and to revive confidence in the economy. So far, this doesn’t seem to be enough to lift the Australian dollar, which is expecting further declines due to a likely downturn in export activity.
US crude oil inventories data is due later today and this could be a catalyst for Loonie volatility since it would reflect whether or not there’s an oversupply. Oil prices are being weighed down by the OPEC’s refusal to cut production in the midst of the supply glut, as the producers are trying to edge out competition from US shale oil companies.
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