In the confrontation between two commodity currencies, we can still observe an uptrend that has lasted for ten months. The Australian dollar turned out to be a much more promising asset compared to the Canadian one, thanks to the actively recovering Chinese economy. Nevertheless, in January, we can see a consolidation in the rates near the peak. The slowdown in China's economy has allowed the Canadian dollar to strengthen its position amid rising oil prices, which consolidated above $50.
At the moment, commodity assets are under pressure due to new Covid-19 cases in China and the lack of noticeable progress in the fight against the pandemic. On the contrary, many countries again were closed for lockdown in January.
There were no macroeconomic reports that could affect the rates over the past week. Therefore, the volatility is not high. The situation will change next week because many important reports will be published - the PMI indices in China, the business activity index in Australia and Canada, the RBA meeting, and data on the trade balances in Australia and Canada. So far, we do not see any signs of a trend reversal - most likely we are dealing with a price correction, which is just beginning right now. It's time to open the deals to SELL. Most technical analysis tools also indicate the efficiency of short deals in the short term.
