The Australian dollar (AUD) has recently shown resilience, trading at 0.9178 against the Canadian dollar (CAD), which is 1.1% above its three-month average of 0.9074. The AUD's strength is attributed to an improving risk appetite fueled by easing US-China trade tensions and speculative expectations surrounding upcoming Federal Reserve interest rate cuts. Analysts suggest that Australia's third-quarter inflation data, projected to rise from 2.1% to 3%, could further support the AUD by diminishing expectations for further Reserve Bank of Australia rate cuts.
Conversely, the Canadian dollar (CAD) has recently faced headwinds, especially in relation to oil prices. Current readings show that the CAD is sensitive to changes in oil markets, with crude oil priced at 64.40, a notable decline of 3.1% from its three-month average of 66.45. This drop reflects a volatile trading environment, with oil fluctuating between 60.96 to 73.37, largely due to oversupply concerns and geopolitical tensions. Analysts predict that further sanctions on Russian oil could create upward pressures on oil prices, which would benefit the CAD.
The Bank of Canada's recent decision to cut interest rates to 2.5% may weigh on the CAD as it seeks to stimulate economic growth amidst a weakening job market. Market experts indicate that while the CAD remains tied closely to oil price dynamics, external factors such as U.S. economic policies and trade negotiations significantly influence its performance.
In the near term, the Australian dollar's trajectory may depend on global economic sentiment and commodity price movements. The strength of the AUD against the CAD may continue as long as commodity demand, particularly from China, remains robust. Meanwhile, the CAD's performance will likely fluctuate in response to developments in the oil market and Bank of Canada monetary policy.
