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Fundie factors sparked big volatility for the Aussie and have pushed AUD/CAD into what could be the start of a new leg lower. Is there still enough momentum to catch a few pips on the day?

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Fresh Market Headlines & Economic data:

Upcoming Potential Catalysts on the Forex Calendar:

  • AIG Construction PMI at 9:30 pm GMT
  • New Zealand Employment report at 9:45 pm GMT
  • U.S. Federal Reserve Chair Powell participates in livestream at 12:00 am GMT (Feb. 7)
  • Bank of England Monetary policy statement at 12:00 pm GMT (Feb. 7)

What to Watch: AUD/CAD

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

On the one hour chart above of AUD/CAD, we can see the pair has taken a turn lower in the last few session, with a recent spike lower thanks to the RBA’s unexpected commentary opening up the possibility of rate cuts in Australia. This is a game changer for the Aussie medium term, but in the short-term, is there still room to run after the big drop?

We could see further volatility in the Aussie for the next session or two, and this pair in particular could see a boost in action from Canada’s economic data: building permits and Ivey PMI report. So far, there isn’t much action for the Loonie, but we could see momentary weakness was the Ivey PMI number came out lower at 54.7 versus 59.7 in January.

So, what we’re looking out for today is a potential bounce higher in AUD/CAD to the previous swing low up to the falling ‘highs’ pattern, and see if any bearish reversal patterns pop up to play the bigger theme of an open door for potential interest rate cuts in Australia. This is something that could play out over the next session or two, and with a daily ATR of around 68 pips, snagging 30 – 50 pips is not out of the question before the end of the week with AIG Construction PMI and Canadian jobs data to spark some volatility very soon.