AUDCAD is trading in somewhat of a tight retracement trend as it attempts to claw back some of its losses from earlier in the year. From a technical perspective it seems to be gearing up for another push higher in the short-term, with the pair bouncing off a support zone around 0.9780. However, a bearish crossover in 4-hr MACD and possible bearish divergence between RSI and price should worry AUDCAD bulls.
From a fundamental perspective, the pair is in data watch mode. Earlier today Australian home-loan figures came in below expectations which resulted in a small sell-off in the Australian dollar. However, there is enough liquidity and the robustness of the housing market is hard to argue with, at least for now. There is the threat of a bubble forming in housing, but we have no indication that a significant correction is around the corner. Overall, we don’t think today’s figures will have a prolonged negative impact on the Australian dollar.
In Canada, we are waiting for the release of labour market data for September. The unemployment rate is expected to remain at 7.0% and 20K jobs are anticipated have been added over the month. It’s also worth keeping an eye on oil prices. Brent crude just dropped to lowest level in 10 years as global growth fears weigh on the so-called ‘black gold’.
If tonight’s Canadian labour market figures come in below expectations it will give the market another reason to short the CAD. While we’re weary of becoming too bullish on the aussie, this is only against the yen and USD. In fact, AUDCAD may be looking at another short-term rally, which fits in well with our mildly bullish technical bias.
AUDCAD – 4hr
Source: FOREX.com
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