audcad drops to test key support 2670742016

This is a quick update about the AUD/CAD article we posted on Wednesday of last week (click HERE for details).

Although oil prices have remained weak, the Canadian dollar has managed to hold its own relatively well compared to some of the other commodity currencies, with the Aussie and kiwi dollars both falling sharply in recent days on speculation about further rate cuts from their respective central banks. In contrast, the Bank of Canada delivered a more hawkish-than-expected policy statement last week, suggesting that it has moved to a more neutral stance. This week’s key event risk for the AUD/CAD pair is Canada’s CPI figures released on Friday, as well as the on-going volatility in oil and other commodity prices.

The resulting price action since our last update has been consistent with our expectations. As can be seen from the updated chart, below, the AUD/CAD has indeed falling to test the key support region in the 0.9725-0.9750 range. As previously mentioned, this area had been resistance in the past and it is also where the 200-day moving average converges with the shallow 38.2% Fibonacci retracement against the most low from May.

As you would expect, the cross has bounced off this 0.9725-50 support range today due to a combination of profit-taking from the bears and reloading of long positions from the bulls.

What price does next could have a big say in terms of near-term direction.

(1) A potential break below this 0.9725-50 support region could potentially lead to further follow-up selling pressure towards 0.9570/5 area where the 61.8% Fibonacci retracement level meets 50-day moving average.

(2) Conversely, if the 0.9725-50 support range holds firm and price moves above the next potential resistance at 0.9795, then it may rise towards the next reference point at 0.9870 or even revisit the prior highs.

Conservative traders may therefore wish to wait for price to make its next move before taking a view on direction.

From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.

City Index is a trading name of StoneX Financial Pty Ltd.

The material provided herein is general in nature and does not take into account your objectives, financial situation or needs.

While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments.

StoneX recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment further CFD investors do not own or have any rights to the underlying assets.

It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.cityindex.com/en-au/terms-and-policies/, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. Our Target Market Determination (TMD) is also available at www.cityindex.com/en-au/terms-and-policies/.

StoneX Financial Pty Ltd, Suite 28.01, 264 George Street, Sydney, NSW 2000 (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.