The rates continue in the frames of the downward trend which was formed in early 2017. It was formed based on the hawkish monetary policy of the Bank of Canada and the stabilizing oil prices.
This week in the absence of economic and political events the rates have been influenced by increasing commodity prices. The prices for copper, iron ore, and oil achieved two- to three-year highs. In this situation, the CAD felt more confident due to the increase in oil prices and the rather positive forecasts for the oil market next year. Oil (CL/WTI) has overcome the psychological level of 60 dollars per barrel. The upward trend is becoming more intense, although it is likely that the peak has been reached.
At the moment the most optimal would be the deals to SELL, according to the trend. In a week the market will receive important data for the employment market in Canada, as well as the trade balance in Canada and Australia. So, by the end of next week market volatility will increase. The MACD and Stochastic oscillators unanimously confirm the efficiency of the short deals in the short-term perspective.
As for the long-term forecasts, we can expect that next year the Canadian dollar will feel even more confident. The Bank of Canada will continue its hawkish policy and may raise interest rates 1-2 times next year. The oil market will be more stable and will not exert pressure on the CAD.
At the end of this year investors began to doubt the stability and reliability of the AUD. The Central Bank of Australia, in turn, shows that they are not interested in a strong Australian dollar and believes that the strengthening of the currency is a risk for the Australian economy. Most likely the RBA will retain a soft monetary policy aimed at stimulating the economy.
Thus, there are no prerequisites for the trend reversal. Most probably the downtrend will continue in the beginning of 2018.
