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AUD/CAD will likely see some action in the next session or two as the Reserve Bank of Australia will give its latest interest rate decision very soon.

Intermarket Snapshot

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Fresh Market Headlines & Economic data:

Upcoming Potential Catalysts on the Forex Calendar:

  • New Zealand business confidence at 11:00 pm GMT
  • New Zealand building permits at 11:45 pm GMT
  • Reserve Bank of Australia Cash target rate at 5:30 am GMT (July 1)
  • U.K. Nationwide house prices at 7:00 am GMT (July 1)
  • Europe PPI at 10:00 am GMT (July 1)

What to Watch: AUD/CAD

AUD/CAD 1-Hour Forex Chart
AUD/CAD 1-Hour Forex Chart

Big time moves coming for the Aussie as we’ll get the latest interest rate decision from the Reserve Bank of Australia in the upcoming Asia session, with expectations of a 25 basis point cut to 1.00%. Of course, there are multiple scenarios that could play out, with the likely one being that the 0.25% cut was likely priced in well ahead of time so it’s possible that some profit taking could occur after the event if this occurs. If they hold off on a cut, a bounce is more likely to be the reaction, depending on the tone, and if they cut big, then a follow through sell off could be the market’s reaction. We’ll have to wait-and-see.

So, with multiple scenarios pointing to a bounce, that might be a good opportunity for the bears who to play the weakening economy & falling interest rate theme in Australia. And they could do it against the Canadian dollar, which has recently benefited from rising oil prices, a scenario that looks to stay for now as OPEC set to extend oil production curbs by nine months. That means the downtrend in AUD/CAD is likely to hold for the next few sessions, so a return to the minor resistance area on the one hour chart above (around 0.9200) could draw in the bears once again. Look out for that retest and reversal patterns to the downside if the RBA does cut, especially with a dovish outlook.

For the bulls, a hawkish hold is the only likely scenario to break AUD/CAD above the resistance area between 0.9200 – 0.9250, but another scenario to look at is if the pair moves to the previous swing low area just above 0.9100, look for bullish reversal patterns as the move may be limited and profit taking may occur for a bounce with the Loonie set to get Canada’s monthly employment numbers on Friday. Support at 0.9100 could be good for a bounce within the daily average true range of about 45 – 50 pips.