AUD/CAD Outlook: The outlook for AUD/CAD is bullish, as the rate is above its recent average and near recent highs, supported by solid economic indicators from Australia.
Key drivers:
• Rate gap: The Reserve Bank of Australia's signals for potential rate hikes contrast with the Bank of Canada's recent cut, which favors the Australian dollar.
• Risk/commodities: Oil prices are trading above average, providing some support for the Canadian dollar but not enough to outweigh the bullish pressure on AUD.
• One macro factor: The strong employment report from Australia showcases economic strength and raises expectations for continued RBA tightening.
Range: The AUD/CAD rate is likely to hold around current levels while possibly drifting towards the higher end of its recent range.
What could change it:
• Upside risk: A further rise in commodity prices or additional positive economic data from Australia could enhance AUD's position.
• Downside risk: A sharp decline in oil prices or negative news regarding Canadian exports could weaken the CAD against the AUD.