The market bias for the AUD to CAD exchange rate is currently range-bound.
Key drivers include:
- The anticipated interest rate hike from the Reserve Bank of Australia (RBA) to 3.85% early next year, which may support the AUD.
- Canada's manufacturing sector remains weak, as indicated by the contraction in the manufacturing PMI, exerting pressure on the CAD.
- Job growth in Canada has been strong, with a notable drop in the unemployment rate, which could bolster the CAD.
The near-term trading range is expected to remain stable as the pair hovers just above its recent average. The recent AUDCAD price data indicates it has traded in a tight range, suggesting limited volatility.
Upside risks for the AUD include stronger-than-expected commodity prices or shifts in market sentiment favoring riskier assets. Conversely, a sudden increase in oil prices may provide a lift to the CAD, weakening the AUDCAD exchange rate.