In Technical Analysis

AUDCAD Reached its peak?

Looking at a chart of AUDCAD, see below, it appears to have, in recent days, reached a new peak. The chart below shows daily price action and the SMI indicator. The SMI is just shy of where it peaked before the previous sell-off. 

Considered a stable pair, the Aussie dollar vs. Canadian dollar has seen higher volatility recently due to worsening US-China trade tensions. 

The AUD/CAD pair is also highly sensitive to broader commodity price trends and fluctuations. Both are seen as commodity currencies, as both rely heavily on natural resource exports.

As markets digest the latest trade tension headlines, the AUD/CAD allows traders to benefit from macroeconomic developments specific to the markets of Australia and Canada without being directly exposed to the usual Forex majors.

AUD CAD outlook

The Aussie dollar is often affected by its alignment with Chinese and Asian markets. Under the close relations and historical ties to China and its hard commodities, the Aussie dollar has developed a relationship with precious metals. 

More recently, the AUD rate is hugely affected by the US-China trade talks, as are many currency pairs. The Aussie dollar has climbed higher on the wave of possible improvements in the relationship between Washington and Beijing with the “phase 1 trade agreement” being discussed. However, the main issues, including intellectual property theft and the Huawei licensing issues, remain unresolved. The hike in tariffs is scheduled for the middle of December, and the trade talks could turn worse like as has happened before, it is our view that the Aussie dollar is at risk of reversing and heading south in due course.

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MasTec (MTZ) LogoFurther downside for AUDCAD?