Hi everyone,
I’ve noticed that the AUD is heading towards parity with the CAD. Comparing the two individual currencies against the USD, I noticed a difference.
The AUD / USD is around .70 / $1 and the USD / CAD is around $1.40 / $1.00 or flipping it, .60 / $1 approx.
There is perhaps a 10 cent difference when comparing these pairs. If the AUD / CAD does head to parity and stays there, wouldn’t the fluctuations be similar for both currencies against the USD ??
I’m trying to understand the difference, and what causes it to be there, if the AUD / CAD is at parity, shouldn’t it mean that the levels against the other currencies would be similar, because they are at such close levels?? Would that mean that they are worth the same or have I gone wrong in my understanding somewhere??
Does anyone have any insight into this?? Would it be a similar thing for other currency pairs, and if so, why??
Many thanks in advance. 
Hi Markulet.
This is an interesting subject to me, the intercurrency relationships. And let’s get one thing straight. I’m no expert. But, I can only tell you what I have uncovered up to this point. When I look at the market, I am more interested in how all the different currencies relate to one another than say following price action, indicators, volumn, etc…So, that means I keep track of each of the currencies and make correlations. And I base my trades off of that kind of data.
Now, to try to address your questions.
In my opinion, I don’t think it means a whole lot when a pair reaches parity. Now, maybe to the fundamentalists out there doing much research for a longer term assessment, sure. But not to the technical trader. We see it come and go, and, yeah, that’s nice. There’s much paying attention to the trend watch, S & R levels, Fibs, etc…
Now, when you say if AUD/CAD gets to parity, it surely won’t stay there for any length of time. Sure, it could be a resistance level (kinda like we see when pairs reach a round number). But, if (when) it does, then I don’t think there will be any real similar fluctuations between the USD/CAD and AUD/USD. See, all the things that make the AUD, the USD, and the CAD move, as individual currencies, are different. There’s so many factors involved that they cannot possible move in tandem. Let’s look at them. The AUD. When copper is rising very much, that will have an affect on the AUD. Also Gold. They are one of the biggest producers of Gold in the world. Also you have to see where their central bank stands. Maybe they want a devalued dollar, which will help with their bottom line. And the same thing goes with the CAD. We know when the price of Oil does down, that affects them. They are one of the biggest producers (relatively speaking).
So, over time, there’s changes happening. And to some degree there will be a divergence. And I don’t think there’s a way to exploit any kind of direction given the fact of reaching parity from one of the pairs.
That’s all technically speaking. Fundamentally…I’m sure you would have to be looking at a very long term analysis.
But, this is interesting to me, about how the currencies relate to one another.
Remember, I am no expert.
But, I do keep track of them, every day, their %'s and pips from one another, for a couple years going now.
Hope we can continue talking about this subject.
Mike
I think divergence will occur this year, the AU economy doesn’t seem relatively strong but for the last 20 years thanks to the super resource cycle it has held up strong - it really is the lucky country!
The AUDUSD keeps a bullish trend with a support at the 0.7100 level. But possible resistance at the 0.7200 zone.
Good drop on the USDCAD, but there could be a bullish pullback due to the fact that the pair is oversold.
The 1.3400 may act as resistance on the USDCAD, which is where the 200 day EMA is at, to the downside, the 1.3200 may be support.
The USDCAD could not break below the 1.2900 level and it could try to bounce to the 21 day EMA again.
The USDCAD retraces to the 1.3200 zone, but the longer term trend is still bearish. Another visit to the 1.2900 level is possible.
The bearish trend is clearly still in place for the USDCAD. The pair may continue dropping some more towards the 1.2700 level.
The USDCAD is over-extended to the down side on the higher timeframes, therefore, we must be attentive to a possible bullish pullback.
The USDCAD just keeps falling, the pair may try to reach the 1.2400 level as its next support.
The USDCAD is at the 1.3100 level, to the downside, the 1.3000 may act as support or the 1.3200 may act as resistance.