AUDCAD continues to push higher

AUDCAD appears to have broken out of a short-term downward trend, which is part of a long-term upward trend. The pair was bolstered by positive investor sentiment and encouraging economic data out of Australia today. Consumer confidence has increased in Australia this month, according to Westpac (Westpac Consumer Confidence Index jumped to 99.7 from 99.5), and home loan approvals increased 2.3% in February from a month earlier, beating an expected 1.5% increase.

Overall, momentum appears to building behind the Australian dollar, with AUDUSD reaching a new 3.5-month high earlier today. In the near-term, we cannot rule out a push higher in AUDUSD, although a lot will depend on tomorrow’s Australian March employment report. Australia’s unemployment rate is predicted to jump to 6.1% from 6.0% and only 2.5K jobs are expected to have been added over the month.

In Canada, the data calendar is pretty clear in the lead up to next week’s policy meeting at the Bank of Canada. However, given a recent slew of positive data surprises out of Canada, we are weary of a less dovish than expected meeting at the BoC next week. Consumer prices rose 0.8% in February, beating an expected 0.6% increase, and GDP rose more than expected in January at 0.5% m/m. Also, the unemployment rate fell to 6.9% in March (expected and prior 7.0%) and 42.9K jobs were added over the month (expected 25K, prior -0.7K).

From a technical standpoint, our bias remains higher for AUDCAD as long it remains in its broad upward trend. Yet, price action is starting to look overbought, which may see the pair flatten out or drift lower in the short-term.

Source: FOREX.com