Gold 1801,405
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EURUSD 1,1868
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DJIA 34697,50
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OIL.WTI 74,385
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DAX 15668,50
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It’s been a long time since we’ve written anything about this fascinating cross. Why interesting? Trading it allows you not to depend too much on the general risks hanging over the market. Now we are at the beginning of a potential move. Let’s discuss it.
AUD/CAD
What can be said by looking at the daily chart of the pair? You can see that since April 21 the Canadian dollar has been rising steadily against the Australian dollar. Our attentive subscribers, even if they don’t follow this cross, will immediately tell why this was happening.
It’s all about rising oil prices, on which the Canadian dollar is highly dependent. And it’s not just the fact that the budget and Canadian oil producers get more money from the oil they sell. It is the investment climate in the industry that matters. If the price of oil goes up, so does investment in new wells, infrastructure, etc. Investments may come from the US, the EU, Japan etc. But the important thing is that any flows of EUR, dollars or yen need to be exchanged for Canadian dollars. And that is what further pushes the Maple Leaf country’s currency up.
However, in the last couple of months the appreciation of the Canadian dollar against the Australian dollar has stopped. The pair is now in a corridor. The Australian is supported by rising prices of both food and iron ore (which is Australia’s main export). It is a dynamic equilibrium situation.
However, things could get out of hand rather quickly. The reason is the problems that have arisen within OPEC+. We talked about this recently. There has been a correction in the oil market, but it does not look big yet. And it has had almost no effect on the aud/cad pair. But what will happen if the correction in the black gold market continues? Most likely, the cross will break out of its corridor upwards. It will try to reach the parity level again, with the nearest targets at 0.95 and 0.97. The first signal is a break-down of the 50-day moving average (red SMA). The price has been testing it for 4 trading sessions already. But so far all the attempts of the bulls were repulsed.
Will this scenario hold true? Perhaps we will find out as early as this week.
11.00 Address by ECB Vice-President de Guindos
15.30 FOMC member Williams speech
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