Bias: Bullish-to-range-bound, as AUD/CAD sits above its 90-day average and in the upper half of the 3-month range, supported by expectations the RBA will keep policy tighter.
Key drivers:
- Rate gap: RBA signaling tightening in 2026, while BoC sits at a low level after a cut, suggesting AUD could outperform CAD on policy divergence.
- Risk/commodities: Oil price trades above its 3-month average with notable volatility, supporting CAD on energy export demand while the AUD remains exposed to China demand.
- Macro factor: China's uneven rebound dampens demand for Australian exports, adding a clear headwind to AUD compared with CAD's commodity-linked strength.
Range: The pair is likely to drift within the 3-month range, with occasional tests of the upper end, but without a sustained break.
What could change it:
- Upside risk: RBA confirms a tightening path in 2026, encouraging higher yields and a stronger AUD versus CAD.
- Downside risk: oil prices retreat sharply, weighing on CAD and pulling AUD/CAD toward the lower end.
