The exchange rate between the Australian dollar (AUD) and the Canadian dollar (CAD) is currently experiencing downward pressure as the AUD has recently weakened amidst a risk-off market sentiment and disappointing Australian employment data. Analysts have noted that the AUD has slipped to seven-day lows near 0.9086, slightly above its three-month average of 0.8988, indicating a stable trading range since mid-July, with movements confined between 0.8843 and 0.9214. The recent drop in full-time positions in Australia has raised concerns about the health of the labor market, contributing to a cautious outlook for the AUD.
In contrast, the CAD has shown resilience, supported primarily by its positive correlation with the U.S. dollar. The recent trends in Canadian jobs data, however, were less favorable, resulting in a loss of 65,500 jobs in August, which has heightened expectations around potential interest rate adjustments by the Bank of Canada. While bearish sentiment toward the CAD has risen to a five-month high, forecasts suggest there is a possibility for the currency to strengthen in the near term as analysts expect a turnaround, with projections indicating that the CAD could rise to approximately 1.36 per U.S. dollar within three months, driven by speculations that the Bank of Canada's interest rate cuts may be nearing an end.
In the broader context, oil prices, a critical influencer of the CAD, are also facing volatility. Recent data shows that oil prices have dipped to seven-day lows around $66.66, significantly below the three-month average of $68.38, with an 18% trading range indicating increasing uncertainty in global oil markets. Given that Canada is a major oil exporter, the decline in oil prices could further pressure the CAD, complicating its trajectory against the AUD.
Market experts have indicated that the performance of both currencies will be increasingly tied to upcoming economic indicators and the overarching global risk sentiment. The dynamics of the AUD/CAD exchange rate will be shaped by how these factors unfold in the coming weeks, particularly in relation to commodity prices, labor market developments, and central bank policy expectations.
