Since October, we observe a rapid upward movement in favor of the Australian dollar. CAD remains under pressure amid low oil prices and fears of a recession. The Australian dollar was also expected to suffer, being the main indicator of risk sentiment, but the end of the period of hard lockdowns in China supported the value AUD value due to improved expectations of higher export potential to China.
Reports published this week in China confirmed forecasts that the economic situation in China will improve after the end of the zero tolerance policy, despite the catastrophic morbidity of the population. The only thing that prevented the AUD from further strengthening were disappointing employment reports: unemployment unexpectedly rose in December and consumer sentiment still near historical lows.
Oil shows weak growth dynamics despite expectations of a recovery in demand due to the complete cessation of lockdowns in China. Investors at the beginning of the year fear that 2023 will be a year of recession, when the global economy will feel the effects of high interest rates. In Canada, as well as in the United States, a slowdown in the rate of inflation is recorded, which in the short term is a good signal, but at the same time, it may be a sign of a decline in economic activity.
On the chart, we observe the testing of the support line. At the same time, the Stochastic oscillator indicates the rates in the oversold zone. We believe that now is the time for Purchases, as we expect the resumption of the upward movement. Most technical analysis tools indicate the effectiveness of the deals on the trend in the long term.
