The rates continue in the frames of the rapid downtrend which was formed in mid-April. Both currencies are under pressure due to the trade conflict between the US and China, but the Australian dollar is much more dependent on the situation in China, while the Canadian dollar is highly dependent on the situation on the oil market.
This week tensions over the development of the trade conflict have been very high. However, this did not affect the cost of oil, which rose due to the situation in the Middle East: a series of attacks on oil tankers and pipelines of Saudi Arabia. The increase in oil prices supported the CAD's course. Another positive news for the Canadian dollar was the announcement of the possible abolition of duties on imports of steel and aluminum within the agreement between the United States, Canada and Mexico.
This week was very negative for the Australian dollar. Not only external but also internal factors had a negative impact on the cost of the AUD. The data on the labor market turned out to be disappointing: unemployment rose, reaching the highest level in 8 months, the index of changes in wages also fell below expectations. In addition, the volume of industrial production in China increased by only 5.4% in April. In such circumstances, the probability of reducing the rate at the next meeting of the RBA has increased significantly.
At the moment, the cost of the AUD vs the CAD is close to multi-year lows. The RSI and MACD oscillators indicate the rates in the oversold zone and a high probability of a price correction. However, we suppose that the price correction will begin not earlier than a few days from now. Next week we expect the publication of the minutes of the RBA meeting, which is likely to confirm the regulator's plans to reduce the rate. Therefore, in the short term the deals to SELL will remain relevant. The deals to BUY will be effective in the medium term.
