Analysis of the AUD/CAD Pair

AUD/CAD from an Economic Perspective

The AUD/CAD pair declined during today’s trading, as markets indicate that the likelihood of the Reserve Bank of Australia raising interest rates at its scheduled August meeting has become extremely slim, and there is only an equal chance of a hike by December, after second-quarter inflation data which came in weaker than expected reduced the need for further monetary tightening.

However, the RBA governor recently warned that another rate hike may still be needed to bring inflation back to the target level.

AUD/CAD from a Technical Perspective

The AUD/CAD pair has been trading in a range for over a week it has reached the upper boundary of this range and is now attempting a bearish pullback.

We also have a bearish divergence on the 4-hour MACD, which could support the pair’s decline. Targets are near the 0.9800 level as the initial target, followed by the 0.9750 level as the secondary target.

Any rally in gold back to the 0.9880 and then 0.9925 levels is expected to present an opportunity to re-establish short positions. The downside scenario would fail if the pair breaks above the 0.9960 level.