The downtrend continues, but we can see a complete loss of trend intensity and the formation of a flat trend. Last month the rates were actually in the flat range of 0.90713 - 0.91962 CAD, although the support and resistance lines are still to look down. Both currencies are under pressure due to the trade conflict between China and the US. Nevertheless, the Australian dollar can be considered a weaker currency, because it's strongly dependent on the economic situation in China. The AUD pair is also cheaper due to the active reduction of the rate by the Central Bank of Australia and their plans to continue to cut the rate.
During the week we have seen a decrease in oil prices, which certainly contributed to the strengthening of the AUD against the CAD, despite mixed data on the Chinese economy, which showed an increase of only 6.2% in line with forecasts. However, it is the weakest growth for the last 27 years. A decrease in the AUD did not take long, starting yesterday after the publication of the RBA minutes meeting.
The Canadian dollar will be able to continue strengthening today, with the release of new data on the Canadian economy: the consumer price index and retail sales. These reports are some of the most important for the formation of monetary policy, so if expectations for inflation processes are met, this will increase the probability that the Bank of Canada will follow the example of its neighbors and begin to reduce the rate to stimulate the economy in the current difficult conditions.
We believe that the most effective in this situation would be the deals to SELL, as also confirmed by the MACD oscillator and other technical analysis tools. The entry points to the market can also be indicated at the levels of 0.90713 and 0.91962 CAD, the achievement of which will signal a reversal or resumption of the trend.
