Analysis of the AUD/CAD Pair

AUD/CAD from an Economic Perspective

The Reserve Bank of Australia kept interest rates steady at 4.35% during last week’s trading, as expected, and noted that it has sufficient time to assess the impact of the previous three rate hikes on the economy.

Markets currently price in a slim 25% probability of another rate hike at the next meeting in August, and this outlook may change following the release of consumer price data this week, as the headline index is expected to decline slightly, while core inflation may rise slightly.

Meanwhile, the Bank of Canada kept its key interest rate unchanged at 2.25% at its last meeting, with the central bank noting that uncertainty remains high amid the conflict in the Middle East and U.S. proposals to impose tariffs, but it reaffirmed its readiness to intervene if necessary and that it would not allow rising energy prices to cause sustained inflation.

Investors generally expect the Bank of Canada to raise borrowing costs by 25 basis points in December.

AUD/CAD from a Technical Perspective

The AUD/CAD pair rose today near the daily downtrend levels at the 0.9940 resistance level.

This is driven by a bearish divergence in the MACD indicator.

We are currently targeting 0.9830 as an initial target, followed by 0.9750, and finally 0.9570.

This scenario would fail if the pair breaks above the 0.9965/60 levels on a daily candle.