AUD/CAD: Ivey PMI to Give a Boost to the Loonie

The bearish run by the Canadian dollar opposite the Australian currency is projected to be extended today as risk appetite benefits the North American commodity dollar. Analysts are less bearish on the Loonie as data from the Richard Ivey School of Business offers positive figures for traders. Also, speculations of a further cut in the benchmark interest rate by the Reserve Bank of Australia weaken the prospects of the Aussie.

The January update on the Canada Ivey Purchasing Managers Index is forecast to spur the rebound further, after three straight months of declines that left the benchmark in unadjusted terms well below the neutral 50 mark for November. If the consensus forecast is correct for this widely followed leading indicator, the Ivey PMI will rise to 53.7 points. If estimates prove to be correct, the Canadian currency could expand further.

On the other hand, earlier today, Australian retail sales was reported to have fallen for a third straight month in December. Data from the Australian Bureau of Statistics showed that consumer spending dipped by 0.2 percent in December to A$21.42 Billion, upsetting forecasts of a 0.3 percent increase. Based on historical figures, this is an extremely rare run of weakness which strengthens the case for a further cut in interest rates. The last time that sales fell for three consecutive months was in late 1999 to early 2000. Further, the annual growth in sales slowed to just 2.3 percent, less than half the pace that used to be considered normal, and came despite rate cuts in both October and December.

Should the markets continue to favor the Loonie over the Aussie on better economic data from the Maple Leaf, as well as probable easing in the Land Down Under, a short position is recommended for the AUDCAD today. It is advised to keep watch for probable technical price corrections though.


For more news, analysis, technical charts and candlestick analysis, visit AlgosysFx Forex Trading Solutions.

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