Formally, the rates remain within a downtrend but since August, we have seen an end to the downtrend and the formation of a flat one. At the same time, volatility is quite high: during this time, the value of the AUD against the CAD was changing from 0.890 - to 0.9137 CAD. Both currencies are weakened by the trade conflict between China and the United States. However, the AUD, more dependent on the situation in China's economy and its deterioration, looks noticeably weaker at the moment, given also the latest disappointing data on the employment market in Australia and active monetary policy easing.
This week, in the absence of macroeconomic reports, the pair was able to consolidate in the range of 0.8978-0.9000 CAD. At the same time, the market remains quite optimistic in relation to commodity currencies, despite the aggressive rhetoric of Donald Trump at the UN meeting in relation to China. The speech by the head of the RBA yesterday also supported the AUD because the Head of the Central Bank of Australia mentioned a perspective for growth in the Australian economy. Therefore, the probability of reducing the rate next week decreased.
The Canadian dollar unexpectedly weakened last week, given disappointing reports on manufacturing output and lower inflation. In addition, oil prices have not been able to gain a foothold above the level of $60, and have been decreasing this week, given messages about a rapid recovery in the refinery in Saudi Arabia. Therefore, oil remained without incentives for growth, as did the CAD.
Next week, the situation may change again in favor of the CAD. The PMI index of business activity in China will be published, as well as new data on the Canadian economy. In particular, investors expect the trade deficit to shrink to almost 0. Expectations for GDP growth in July are not too high - just +0.1%. So, Canada's economy can cope with this task quite well. Indicators of technical analysis, in the majority, also tend to the deals on the old downtrend in favor of the CAD. Thus, short deals can be considered as the most optimal in the medium term.
