AUD/CAD Fundamental Analysis
The Canadian dollar extends its bearish run against the Australian currency as the American markets come into play. The statement from the Reserve Bank of Australia waned the advances of the Aussie, and has benefitted the Loonie in turn. Medium-term bearish movement is now taking place, likely to propel the currency pair past the almost-one-month 1.0340 price low.
Risk demand from earlier market movement in Europe is set to spur appreciation in the North American trades. U.S. stock index futures signaled a higher open on Tuesday, with markets in Europe trading higher after better-than-expected fourth quarter results from Britain’s BP and Arm Holdings, and Swiss bank UBS. Katy Barnato of CNBC reports that the big media companies start to post fourth quarter earnings today, including Sirius XM Radio before the start of US trade, and Dow component Disney afterwards. Analysts polled by Reuters forecast Disney will post earnings of 68 cents on revenue of $10.8 Billion, up from earnings of 58 cents on revenue of $10.4 Billion a year before.
Also, sector expansion is expected from the Institute for Supply Management’s non-manufacturing index, which tracks monthly changes in the services sector. Economists polled by Reuters predict activity decreased in January to 55.2, down from 56.1 in December.
Moreover, as had been widely expected by market participants, the Australian central bank held its benchmark interest rate at 3.0 percent. However, RBA Governor Glenn Stevens said in the statement today that “Looking ahead, with the labor market softening somewhat and unemployment edging higher, conditions are working to contain pressure on labor costs.” Further, according to the RBA Rate Statement, “The Board’s view is that with inflation likely to be consistent with the target, and with growth likely to be a little below trend over the coming year, an accommodative stance of monetary policy is appropriate.”
Should market speculation on a probable rate cut by the RBA continue to spur the currency pair’s price action, a sell bias is advised for the AUDCAD today. It would be wise to keep watch for probable technical price corrections though.
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