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AUD/CAD: Fundamental Review & Forecast

Published on: 15/03/2017

The rates of the AUD/CAD continue in the frames of the uptrend formed in the beginning of the year. The Canadian dollar is under the pressure of the record low oil prices this year. The price of oil fell during the week from 54 to 48 dollars per barrel for CL/WTI, contrary to the forecasts for further stabilization of the market amid a reduction in oil production.

OPEC maintains that the countries who joined the Agreement on the reduction of oil abide it by 90%. However, this somehow allows Saudi Arabia to increase oil production. Signals about the increase of oil production appear on the market regularly, and investors react to them. In any case, the US is not even going to reduce oil extraction: the number of drilling rigs increases, and hence the volume of oil production will only be increasing. In these conditions whatever OPEC does, it will not be able to stabilize oil prices.

Positive employment data in Canada, in particular the increasing of the number of jobs at 15300 against the forecasted 2500, the level of unemployment at 6.6% versus the forecasted 6.8%, couldn't change the situation for CAD. The sharp decline in oil prices was too rapid for the Canadian currency.
The Australian dollar feels more confident against the Canadian one.
The market reacted positively to the RBA's decision to leave interest rates unchanged. Yesterday, the AUD was further supported by encouraging new statistics on the economy of China where the volume of investment in basic capital was 8.9%, which is very high and shows investors' confidence in China's economy, despite the negative aspects such as data on the trade deficit of China for the first time in three years, and a decrease in exports.

AUD/CAD, H4 chart
On the AUD/CAD chart we can't see any signs of a trend reversal. The MACD Oscillator is neutral. The Stochastics expects a price correction and suggests opening short deals against the trend. Such deals may be effective in short-term trading. In addition, a price correction that may supports the CAD is expected on the oil market. Stll, in medium-term trading it is better in this situation to open the deals to BUY.

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