In the confrontation between the two commodity currencies, the Canadian dollar turned out to be the most preferable for investors. The Australian dollar, as an indicator of risk sentiment, was expected to suffer the most, while the CAD is back on the rise due to the rapid growth in oil prices, which is supported by both the weakening USD and OPEC policy on oil production volume.
This week, the Australian dollar was supported by both strong macroeconomic reports in Australia and news from China, where a trade surplus was recorded 2 times more than expected. As for Australia, there we saw a decrease in unemployment and an increase in the index of consumer sentiment by 9.4% instead of the forecasted 1.5%. This did not bring any breakthrough to the Australian dollar as investors are still not ready to take risks. At the same time, we can see that even the decision of the Bank of Canada to take a pause in raising the rate did not change the situation as a whole: the Bank of Canada growth forecast for 2023 was revised upward from 1.0% to 1.4%. This pleased investors and strengthened the Canadian dollar.
Thus, the downtrend continues in favor of the CAD. Next week will be less volatile, but China's GDP will make a big difference for this currency pair. Quite possibly, the Australian dollar will get some more stimulus to growth. This fits well with the current chart where the price correction started. Buy trades will be effective according to technical analysis tools in the short term, so we are buying AUD today. However, growth will be limited, and soon we may see a continuation of the trend.
