Despite a late bullish run by the Australian currency last week, the Canadian dollar was still able to capitalize on its early gains and post a weekly profit for the first time in six weeks. Price activity looks to replicate last week’s start to the trading week, as a steep drop in the AUDCAD can be observed from the 1.0408 price mark.
Stronger-than-forecast growth in the Maple Leaf contributes to the Loonie’s appreciation, not to mention hikes in crude oil prices. Canadian Real GDP rose by 0.3 percent in November, following a 0.1 percent increase in October. “For the loonie, it was a decent week and we did see it find support from better-than-expected growth data for November,” Joe Manimbo, a market analyst in Washington at Western Union Business Solutions, said in a telephone interview. “We’ll have a better idea when we see the jobs data (this) week and if unemployment can hold near a four-year low that would keep the Bank of Canada on a path to eventually raise interest rates.”
Meanwhile, speculations of a surprise rate cut by the Reserve Bank of Australia are putting a damper on the Aussie’s advances. The Australian central bank holds its first policy meeting of the year tomorrow. The Aussie dollar has been on a robust hike in recent weeks, and currency strategists are presupposing that the RBA could use the opportunity to deliver a surprise interest-rate cut to underpin the economy and dent the Aussie’s strength. Its latest move was a quarter-point cut in December and was recent enough for many economists to say the RBA will hold its fire this month. Markets put the chances of a rate cut this week at just 18 percent. Some analysts say that with inflation benign and data still pointing to weakness in some sectors of the economy, further monetary easing should not be ruled out.
Should market speculation on a probable rate cut by the RBA continue to spur the currency pair’s price action, a sell bias is advised for the AUDCAD today. It would be wise to keep watch for probable technical price corrections though.
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