The AUDCAD currency pair has once again approached the 0.915 level for the current month. Previous attempts to break below this level were met with active resistance from the bulls, who tried to buy back at least part of the decline. This time around, the most likely scenario is for prices to bounce back. Supported by fundamental factors, the price could rise to the 0.923 level and then open the way to the October highs.
On Wednesday, the Bank of Canada met market expectations and lowered its key interest rate by 0.5% to 3.75%. However, rather than weakening the Canadian currency, the move actually strengthened it. Analysts polled by Reuters attribute the positive dynamics of the Canadian dollar to the optimistic forecasts of the regulator’s officials regarding the national economy. However, a number of experts consider these assessments unjustified and call on the Bank of Canada to continue active measures to ease monetary policy.
Tony Stillo, director of Oxford Economics, questions the forecast of 1.5% GDP growth in Canada for Q3 and 1.2% for 2024 as a whole. He believes that the real data will be much worse, and that the Bank of Canada will have to cut interest rates by another 0.5% at its meeting on December 11. Claire Feng of RBC expects the cycle of lowering borrowing costs to continue in 2025, as the Canadian economy will not feel any positive changes immediately.
Meanwhile, the Reserve Bank of Australia (RBA) remains reluctant to cut rates in the face of persistent inflation. In her speech today, RBA Governor Michelle Bullock said it will take at least another year for price growth to slow to the target range of 2-3%. According to the regulator’s estimates, inflation in Australia will not fall to 2.9% until December 2025. Under these conditions, we should not expect the RBA to ease its policy at the next meetings.
AUDCAD’s fall to 0.915 provides an opportunity to open long positions at favorable prices. A rebound to 0.923 could take place next week.
Consider the following trading strategy:
Buy AUDCAD around the level of 0.915. Take profit – 0.923. Stop loss – 0.913.
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