AUD/CAD Fundamental Analysis
With US earnings season underway, the anxiety level in the world’s largest economy is leading to the defeat of the Canadian dollar against its Australian counterpart. Also, hirings in Australia came out more than what economists forecast for the past month.
Of the lowered 2012 forecast and the weaker global economy affecting corporate earnings, Steve Massocca of Wedbush Securities comments, “Maybe people think it’s for real this time. You had a market that’s rallied a lot this year. You have a market that has a little air under it.” Analysts are saying that people are worried about those companies that have overseas exposure what with what is happening in Europe and China.
Concerns that slowing growth in China will hurt the demand for commodities such as oil and gold are hurting the prospects of the Loonie ComDoll. A survey by Bloomberg forecasts that China’s economic expansion will slow to 7.7 percent this year from 9.3 percent in 2011. Alcoa Inc., which happens to be the largest US aluminum producer, reduced its forecast for aluminum exports to China, the world’s biggest consumer of metals and energy. Energy and raw-material producers led losses in the Standard & Poor’s 500 Index. Since Canada derives about half its export revenue from raw materials, demand for the currency is on a wane in a double-whammy of possible reduced export revenue and lower US earnings.
Meanwhile, the Aussie touched its highest level in more than a week after a report showed that more people found work last month than the initial expectations. The statistics bureau reported that the number of people employed rose by 14,500 in September, after a revised 9,100 drop the prior month. While this is the biggest increase since May, it also came out almost three times the forecast of 5,100.
Considering the effect of these fundamental data on the currency markets today, traders are likely to shun the Loonie for the Aussie. As such, a buy position is deemed for the AUD/CAD. Technical price corrections are still likely however.
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