The downward trend continues. It should be noted that in this case, the downward trend was formed in 2017, and the coronavirus did not change anything here. The Australian dollar is becoming less attractive to investors, although there are also enough negative factors for the CAD.
The epicenter of the pandemic shifted from China to Europe, which should have had a positive impact on the cost of the AUD. Therefore, the strengthening of the Australian currency, which has been observed over the past week, is absolutely natural. The Canadian dollar, in turn, is under increasing pressure due to the situation on the oil market. According to the International Energy Agency, the demand for oil will decrease by 20% under the influence of the pandemic. Also, there is a growth of oil reserves in the United States, as well as around the world, and according to analysts, in a few months there will simply be no place to store it. According to experts, there are 12.4 million barrels of oil more than is necessary for a day. Therefore, oil this week consolidated in the range of 21-25 dollars, and at this rate, it may fall in price to 15 dollars in the next month, amid continued restrictions related to movement around the world due to the coronavirus.
Next week may be more volatile for the AUD/CAD: reports on business activity in China, Canada's GDP in January and the trade balance are coming out, although strong external factors may be crucial for these two currencies.
In the current situation, the deals to BUY can be considered more promising in the short term. The trend reversal is not yet expected, but the upward movement that started seven days ago can continue next week, as part of the standard price correction. Technical analysis tools are multidirectional, but we believe that the most correct signal in this case is the MACD oscillator signal - to open the deals to Buy.
