The Australian dollar unexpectedly turns out to be stronger than the Canadian dollar, which has a powerful factor behind it in the form of oil prices. How did the Australian dollar seize the lead and become stronger than one of the world's most powerful currencies?
Both commodity currencies, being influenced by the same factors, receive support. The difference lies in monetary policy and the state of the economy. The RBA at its last meeting kept the rate at an incredibly low level of 0.1%, while the Bank of Canada has already raised the rate to 0.5% in March, taking into account high inflation. In Australia, inflation has so far remained at a very low level though it has potential of growth. At the same time, the RBA showed hawkish plans for the future regarding its monetary policy, and admitted that maintaining such a low rate would be challenging in the future. At the moment, monetary policy remains the softest, after the Bank of Japan. Therefore, the value of AUD has the potential to grow. The Australian bond yields have reached a five-year high, and the cost of iron ore has increased by 34.8% in just 3 months.
As previously said, the Canadian dollar is extremely powerful when compared to the euro or even the US dollar where it has an undeniable advantage. Macroeconomic reports can be called stunning, as unemployment is at a record low, oil and aluminum are at a record high, the IHS Markit Manufacturing PMI index reaches a historic high in March. Nevertheless, this was not enough against the Australian dollar, which, according to investors, is more promising compared to the Canadian dollar, the value of which already takes into account both the cost of oil, recent changes in the rate, and other mentioned above achievements on the economic front.
On the four-hour chart, you can observe a confident upward trend, which began in early February, before the outbreak of the war in Europe. On the daily chart, you can observe not just a price correction, but a trend reversal. Therefore, if you want to distance yourself as much as possible from the turbulent political events in Europe, then AUD/CAD is exactly the currency pair where the macroeconomic component still matters, and technical analysis indicators give correct signals. In this case, it is a Buy signal. Therefore, our choice for today are the deals to BUY with AUD/CAD currency pair.
