Bias: Range-bound, current CAD/AUD sits near the lower end of the 3-month range and is below the 90-day average, reflecting mixed signals from oil and policy.
Key drivers:
- Rate gap: Canada’s BoC policy remains looser than the RBA’s likely path, widening the rate gap toward AUD. That keeps CAD under pressure as policy paths diverge.
- Risk/commodities: Oil remains above its 3-month average with volatility, supporting CAD as a commodity-linked currency. That link helps CAD when global risk appetite shifts.
- One macro factor: China’s soft inflation reinforces weaker Chinese demand for Australian goods, weighing on AUD. This backdrop keeps AUD under pressure even when broader markets move.
Range: CAD/AUD is likely to drift within its 3-month band, holding near the lower boundary as oil and China data influence flows.
What could change it:
- Upside risk: a sustained oil rally keeps CAD supported, pushing CAD/AUD toward the lower end of the range.
- Downside risk: China demand stabilizes and the RBA signals tighter policy, lifting AUD and pushing CAD/AUD higher.
