The AUD continues to decrease against the CAD. The deals on the trend are still effective in the short term.
The rates continue within the downtrend, which has lasted for more than a year. As a result, the quotes are steadily approaching the psychological level of 0.911 CAD, below which the Australian dollar has not fallen in this decade. Nevertheless, this level was tested less than a week ago, but then the rates shifted up, towards the resistance line, within the frames of the price correction. At the same time, there are no signs of a new trend, and the incentives to strengthen the AUD may not be enough in the near future. Therefore, the continuation of the downtrend in the near future with the achievement of new minimums is not excluded.
The Australian dollar has recently been perceived by investors as an indicator of China's economy and its import potential is under the influence of the trade conflict between the US and China. The situation is deepening by the soft monetary policy of the RBA and the changeable economic situation. However, the latest data on the Australian economy strengthened the value of AUD. Australia's trade balance remains positive for the eighth consecutive month. Moreover, in August the balance surplus rose to 1.6 billion AUD, while investors expected a decrease to 1.4 billion AUD. Export volumes increased by 1% to AUD 36.56 billion, again approaching the record figure for exports, which has been reached in June this year. Such indicators are significant for investors, showing a much weaker impact of the trade conflict than could be forecasted.
Despite the improvement in the Australian economy, the Canadian economy at this time successfully resists the strengthening of the AUD, showing an even more impressive performance. The trade balance was positive for the first time in 20 months. The surplus in August amounted to only 0,526 billion CAD, while the market was expecting the completely opposite minus 0.5 billion CAD. At the same time, the volume of exports and imports decreased by 2.5% and 1.1%, respectively, but the rate of decline in exports was 2 times lower than the rate of decline in imports, which in the long term increases the probability of trade surplus growth. Another impressive achievement is the data on the labor market. In September the number of jobs increased by 63.3 thousand, while the market expected 2.5 times more moderate job growth after the reduction in the number of jobs the previous month. The unemployment rate, respectively, fell from 6% to 5.9%, according to forecasts. The only negative indicator was the decreasing of the PMI business activity index from 61.9 points to 50.4 points in September, which is likely due to uncertainty in trade relations between the US and Canada. However, the issue was already resolved in early October, and a new trade agreement has been successfully signed between the US, Canada, and Mexico, which certainly had a positive impact on the cost of the CAD. At the same time, oil prices continue to support the Canadian dollar. Oil continues rising in price amid the falling exports from Iran. A temporary factor is also the coming hurricane Michael to the Gulf of Mexico, in anticipation of which 19% of the oil production capacity was paused, which raises fears about the possible shortage of fuel on the market.
At the moment the MACD and Stochastic oscillators are multidirectional. It is safe to assume that the downtrend will continue, but the further decreasing will be limited. Trend-following deals seem the most effective in the near future, but the efficiency of the deals to BUY will be increasing if the rates come closer to the level of 0.911 CAD.
