AUD/CAD, a pair of “commodity currencies†has made a steep downfall and is now trading at levels last seen in late October 2012 after breaking below the February low of 1.0240.
The rate cut announced by the Australian central bank to cut the rates was the trigger, but the pair also suffers from strength on the Canadian side of the equation. Where next? Jobs reports will determine the next big moves.
The RBA cut the interest rate to 2.75%, below the previous post-crisis low of 3%. This sent AUD/USD to test the low side of the long term 1.0150 – 1.06 range and weakened the Australian dollar across the board.
Lower inflation, no significant growth in domestic activity and probably a peak in mining investment triggered the decision. In addition, the high rate of the Aussie is probably of concern to the policymakers. For more, see the AUDUSD forecast.
In Canada, improved prospects for US demand, higher oil prices and a good GDP report strengthen the Canadian dollar. USD/CAD is gradually making its way towards parity For more, see the USDCAD forecast.
AUD/CAD dropped from around 1.03 to 1.02 before stabilizing. On the downside, 1.0150, 1.0050 and parity provide support. On the topside, 1.03 is resistance, followed by 1.0420 and 1.0546.
Where next?
Australia will publish its jobs report on Thursday, at 1:30 GMT. Australia is expected to gain 11.5K jobs and the unemployment rate is expected to remain unchanged at 5.6%.
Canada will publish its job numbers on Friday at 12:30 GMT. Canada is expected to gain 13.5K jobs and also see no change in the unemployment rate: 7.2%.
Recently, Canada has seen a “see-saw†in jobs report: an excellent report for February followed by a horrible one for March. If the see-saw continues, we could see the pair continue falling after the breakdown and move towards parity. This is assuming that the Australian jobs report will not be superb.
Jobs figures always have a tremendous effect on currencies.
More technical analysis:
- USDCAD Could Look for a Support This Week at Trend-line from 2012 Low
- AUDUSD: Break of 1.0220 Support After RBA Puts 1.0100 In Play-Elliott Wave
Live chart of AUD/CAD:
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