AUD/CAD pair should reverse and head toward 0.99 in coming weeks - Westpac
|Martina Song, Research Analyst at Westpac, sees 1.01 as the higher end of AUD/CAD trading ranges and the pair should reverse and head toward 0.99 in coming weeks.
Key Quotes
“Both AUD and CAD are vulnerable to a resumption of the USD uptrend, but as a high beta currency the AUD should fall further.”
“AUD was one the weakest G10 currencies in the wake of the US election and FOMC rate hike, but the strongest year to date as the USD has pulled back. Q3 GDP was soft but markets see the RBA as reluctant to cut. Commodity prices have so far been a positive but the durability of the bounce and impact on domestic incomes and employment are uncertain, limiting AUD upside. We shouldn’t see AUD/USD trade sustained above 0.76 and we expect the Aussie to dip from here.”
“While Canadian fundamentals should benefit from the recent OPEC/nonOPEC deal-driven oil rally, domestic data and the Trudeau government’s fiscal stimulus, the Bank of Canada’s refusal to take a rate cut off the table keeps a cap on the currency. A renegotiation of NAFTA also weighs on CAD, though we see this playing out more in USD/CAD than AUD/CAD.”
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