- The Australian dollar has been somewhat noisy against the Canadian dollar during trading on Wednesday, as the Bank of Canada took center stage. That being said, nothing significantly changed as far as the “big picture” is concerned.
AUD/CAD
To begin with, the Australian dollar has found itself to be a little extended against many currencies, the Canadian dollar included, and the 0.95 level is an area that I think a lot of people will be watching closely as it is a large round psychologically significant barrier. When I look at this chart, I also recognize that a lot of the volatility from Wednesday was probably due to the Bank of Canada having an interest rate decision, so that ties in quite nicely with the idea of volatility coming into the picture as well.
Technical Outlook and Fundamental Drivers
The technical analysis does suggest that there is plenty of support below, especially near the 0.9350 level, an area that previously had been rather significant resistance. I do like the idea of buying dips in this pair, and I think given enough time that is probably what works out best, as the uptrend has been so strong.
The Australian dollar is getting a bit of a boost due to the perceived need of the Reserve Bank of Australia to hike rates while most other banks around the world, including the Bank of Canada, are most likely going to be sideways. Furthermore, the Chinese manufacturing sector is starting to pick up and that is a good thing for Australia as well. So, with this being said, it does make a lot of sense that we continue to go higher and perhaps towards parity over the long term. This could take some time, but ultimately, I think parity is where we are going to go eventually.
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