The Canadian dollar (CAD) has recently been affected by slow progress in US-Canada trade negotiations and concerns over economic performance signals. Analysts indicate that the CAD has ticked lower amidst uncertainty surrounding trade talks, which are critical given the substantial export reliance on the U.S. Additionally, reports of another potential contraction in Canada's Ivey PMI could further pressure the currency in the near term.
In contrast, the Australian dollar (AUD) saw a notable surge following the Reserve Bank of Australia's (RBA) decision to maintain interest rates, which was unexpected by many investors. This decision has contributed to a risk-on sentiment in the market, allowing the AUD to strengthen despite recent concerns regarding weak economic data from China, a key trading partner. The AUD has also been buoyed by optimism stemming from geopolitical developments, such as the deferral of trade tariffs by U.S. President Donald Trump.
Recent price data indicates that CAD/AUD is currently trading at 30-day lows near 1.1096, which is 1.3% below its three-month average of 1.1239. This reflects a stable trading range of 3.5% over the past quarter, oscillating between 1.1089 and 1.1477. With oil prices recently trading at 70.36 USD per barrel—4.9% above their three-month average—analysts believe the CAD could receive some support from higher oil values. However, fluctuations in commodity prices are expected to remain key drivers for the CAD’s performance.
Market participants should remain attentive to upcoming economic releases from both Canada and Australia, particularly regarding employment data and manufacturing indicators. The ongoing trade dynamics between Canada and the U.S. present continued uncertainty that could impede CAD performance, while any shifts in the commodity prices crucial to the Australian economy may influence the AUD's trajectory. As the market evolves, careful monitoring of central bank communications and global economic signals will be essential for traders navigating these currencies.