AUD/CAD: Fundamental Review & Forecast
The CAD continues strengthening against the AUD. Investors expect an increase of the interest rate today.
The rates of the AUD/CAD continue in the frames of a downtrend. Last month the Canadian dollar successfully withstood the pressure due to low oil prices and strengthened against the Australian dollar. The Australian dollar continued decreasing even after the positive statistics about the trade balance, although this did support the AUD for a few days. Last week the RBA refused to raise the interest rate. Despite the positive economic data, the RBA supposes that the goals of its stimulus program haven't been achieved yet. In particular, the RBA is concerned about the situation on the labour market.
This week we do not expect important information about the AUD. The only thing that can have an impact on the value of the AUD is information about the Chinese economy. As for the CAD, we expect important information. In particular, this evening investors expect a decision from the Bank of Canada regarding raising the interest rate. Given the recent information about the PMI index and positive reports about the employment market, investors are sure that the Bank of Canada will raise the interest rate by 25 pips - up to 0.75%, for the first time since 2010. Thus, Canada will become the first country after the United States to tighten its monetary policy amid the good economic situation in the country. Another reason for the further strengthening of the CA, is a growth in oil prices, which have increased due to information about a reduction in the reserves of WTI crude oil by 2.1 million barrels for a week in the main oil storage reservoir of the United States. In addition, it was reported that OPEC can limit the volume of oil extraction in Nigeria and Libya, which were free from obligations to reduce the volume of oil production with the current agreement.
In this situation, the optimal decision is to open the deals on the trend. The Stochastic oscillator also gives a signal for short deals indicating the rates in the overbought zone.
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