AUD/CAD Signal 24/09: Buy Near 0.9920, Target 1.0100 (Video)

(MENAFN- Daily Forex) Potential signal:

I am still bullish on this pair, and I am willing to buy here. The stop would be 0.9820 and target is 1.01The Aussie fell as oil prices surged, against the Canadian dollar. This is just as we had tested parity.

AUD/CAD

This is a pair that's seen a pretty significant sell-off during the trading session on Wednesday, but when you look at the longer-term view, it is still one that's in the process of trying to break out to the upside.

I'm still bullish on this pair, but something happened on Wednesday that changed the outlook, at least in the short term. That would be the fact that the Iranians seemingly hit some type of cargo ship or possible tanker in the Strait of Hormuz, and the market, of course, shot up in the air for oil. That has a bit of an influence on the Canadian dollar, although we're still more or less, I believe, waiting to see what exactly has happened and where we are going from here.

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Overall, though, the interest rate differential is still wide enough to drive a truck through

Nonetheless, the Canadian dollar is a proxy for crude oil, so it all ties together quite nicely. Overall, though, the interest rate differential is still wide enough to drive a truck through, and it's important to know that Australia is actually pretty hawkish when it comes to its central bank, as opposed to Canada, which might be a little bit more neutral. If that's going to be the case, the interest rate differential alone might be a reason to own this pair.

We did just touch the parity level and then collapsed from there. It would not surprise me at all to see the Australian dollar break above parity, not only because of the overall momentum, but you have to keep in mind that Canada still has a major trade issue with the United States, which is about 70% of its exports, maybe even 75%.

In other words, they have this huge gaping hole in their economy. While Canada is flirting with the European Union, the reality is that even if a deal gets done, it's never going to replace the largest economy in the world that sits on your border.

So Canada does have a major problem at the moment, and I do think that the Canadian dollar in general remains softer. This is a byproduct of what's going on in oil, and now the alternative scenario is that oil just absolutely explodes. Then we have a different conversation. But as things stand right now, I think this could end up being a buying opportunity.

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