AUD/CAD Forecast Today 17/01: AUD Pulls Back (Video)

2025-01-17 04:21:55

(MENAFN- Daily Forex)

The Australian dollar initially did pull back a bit against the Canadian dollar, only to turn around and show signs of life.
The question at this point in time is whether or not the Australian dollar can continue to go higher because we did touch the top of an area of support, which extends from 0.8850 down to the 0.88 level.

In general, I think this is a market that is basically a fight between two lightweights, but unfortunately for both of these economies, they are highly levered to larger economies. In the case of Australia, they are highly levered to China, and of course, the Canadians are highly levered to the United States.

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Basically, these are two main suppliers of natural resources to this, in a roundabout way, is an argument between the United States and China. And it is worth noting that the US economy is firing on all cylinders at the moment, quite strong, actually, while the Chinese economy has seen bond yields collapse as people run for cover. So, it does make a certain amount of sense that the Australian dollar is struggling against the Canadian dollar, despite the fact that the Canadian dollar is essentially on fire at the moment.

Is This Technical?

So, with that being said, I think this is a technical bounce because quite frankly, despite the rhetoric coming out of Washington and Ottawa, the reality is that the Americans and the Canadians will come together with some type of trade agreement. Although I would venture to say the US probably has the upper hand here.

It's not as if the US is going to try to run over Canada. Canada is by far one of the most beloved nations in the United States. The general populace, politicians, they all know each other on each side of the border. So, this is something that I think gets solved pretty quickly. However, when you look at the Chinese economy, which let's be honest, is opaque at best it's going to take quite a bit more. So, because of this, I do think that a rally gets sold into and I would be very interested near the 0.90 level, which also coincides quite nicely with the 50 day EMA.

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