The Australian dollar looked a little more chippish after today's recent Reserve Bank of Australia (RBA) monetary policy statement as Glenn Stevens looked to keep the cash rate unchanged at 2.0%, it has now been static at this level for 10 months and market expectation is starting to build around the possibility of a move. While the RBA has been fairly positive on the economy the terms of trade are still down for the most part and the global rot in commodities continues to be an issue; something that was very much apparent today when China looked to lay off 1.8 million people from its struggling steel and coal industry, in a sweeping move designed to shake up the industry. However, the recent low inflation in the Australian market presents an opportunity to cut rates further in an effort to help bolster the economy through this struggling patch. Nevertheless, the housing market is seen as being an issue and it may be something that the RBA is a little apprehensive to deal with given the complains in recent years.
On the charts support at 0.7150 proved to be a tough ask for many of the Australia bears out there as the market rallied of this point in the wake of the RBA remaining relatively upbeat. However, weak Chinese data continues to be an issue and any cut in the interest rates would make this level much, much weaker. When it comes to higher highs though resistance at 0.7256 continues to be a very large ask for the bulls in the market and it seems likely that we may end up with a scenario of the AUDUSD looking to play the range between these two levels before looking for a break out lower.
Across the ocean and the Canadian dollar is looking much stronger as oil news starts to swing in the bulls favour on the charts. The most recent API data shows a build up of 9.9 million oils of barrel and production looks to be tailoring off slightly all of which are most certainly positive signs for the Canadian economy which relies heavily on the oil industry to provide investment and support for the economy. On top of this the recent GDP m/m data also was a minor boost as it lifted to 0.2% (0.1% exp), many will be looking at the changes in the Canadian economy as relatively minor, but it's a starting point for a market which has so far been fairly bearish over the recent years.
Looking at the USDCAD and it's clear to see that the bears are very much taking control for a change and there is a large amount of unwinding of positions on the back of the boost in oil markets. For myself the market continues to be very bearish and there is still room to move lower further and support at 1.3291 will be a likely target, and it will continue to head this way as it seeks a long term bullish trend line around 1.3199 that has been in play since July 2014.
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