The AUDCAD currency pair this week had renewed its high from mid-December, after which it began to decline rapidly. At this rate, it will take very little time for quotes to return to the support level of 0.894. Although the Canadian dollar has been quite sluggish in recent days, it has gained a distinct advantage when paired with the Australian currency. A similar situation could continue into the next week.
The Canadian currency is falling against other monetary units ahead of the introduction of tariffs on imports by the US on March 4. Earlier, the markets believed the duties would be delayed until April 2. However, the US president refuted these suppositions, emphasizing his readiness to impose 25% duties on Canadian goods next Tuesday. Canada GDP data in the fourth quarter of 2024 may ease the pessimism somewhat. The growth is forecast by Reuters to accelerate from 1% to 1.9% year-on-year.
Meanwhile, traders were proven that February’s rate cut by the Reserve Bank of Australia (RBA) was the right decision. The country’s annual inflation rate in January remained at the December level of 2.5%, but consumer prices fell 0.2% on a monthly basis. Australia’s most important components of inflation, house prices and rents, rose just 2% and 0.3% respectively. We can say that the real estate sector stopped accelerating inflation, and now its main driver remains only the labor market.
According to a Reuters poll, market participants have raised the odds of the RBA monetary policy easing in April from zero to 17%. At least one rate cut within the next 4 months is almost certain, as analysts at Capital Economics believe. They speak in favor of more dovish stance of the Australian regulator.
The Stochastic indicator lines crossed and started to decline, confirming the AUDCAD sell signal. The nearest bearish target is 0.894.
Consider the following trading strategy:
Sell AUDCAD at the current price. Take profit – 0.894. Stop loss – 0.901.
