AUD/CAD Fundamental Analysis
Though projected for a technical correction in the next few hours of the trading day, the Canadian dollar is anticipated to continue to wane against its Australian counterpart. The Aussie-Loonie pair extends the bullish price movement today due to overwhelming investor response to the Bank of Japan’s monetary policy statement released earlier. An expansion of the Japanese monetary stimulus is perceived to boost the growth prospects of Australia, thereby buoying demand for the Australian currency. On the other hand, consumer spending last November at the Maple Leaf is forecast to have slowed.
Risk confidence in the Asian commodity dollar has been supported by the report that the central bank in Japan would attempt to speed up growth and get inflation in the Japanese economy. The Bank of Japan unveiled an aggressive monetary policy aimed at pushing the economy out of a slump, as it doubled its inflation target to 2 percent and made an open-ended commitment to asset purchases from next year. The Aussie rose on the prospects for growth in the region.
Meanwhile, forecasts on the upcoming economic data from Statistics Canada are etching weakness in the Canadian currency trades. The Loonie is expected to once more submit to the bears as retail sales data for November pose weakness. The core consumer spending figure is anticipated to post a measly 0.1 percent growth in the said period, after showing off a strong 0.5 percent gain in October. What is more, the headline figure is deemed to register no change in the same period, even after a stronger 0.7 percent performance prior.
Investor sentiment is seen to favor the Aussie once more, resulting in losses for the Loonie. A long position is suggested for the AUDCAD, though it would be wise to be on the lookout for expected technical price corrections as the price index already points to an overbought position.
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