The audcad cross is one of the most interesting pairs to be traded as it has a lot of particularities that are not to be found on other pairs. It is also called the commodity cross in the sense that is moving based on two different commodity currencies, namely the AUD and CAD currencies.
Trading A Currency Pair – AUDCAD
The Australian dollar is heavily dependent on the commodity markets so changes in price there are moving the currency. Look for how gold, palladium, platinum, silver, iron, etc is moving and you’ll have a pretty good idea about what the Aud is doing.
One other thing to consider when trading any AUD pair is the economic situation in China as the Chinese counts for almost a third of Australian exports. In other words, a slowdown in Chine shows a decreasing demand for Australian goods and this translates into a softer AUD as well. The opposite is true as well, with a strong Chinese demand being the equivalent of a stronger Australian dollar.
However, maybe the most important aspect to consider is the fact that the AUDCAD cross is paying a positive swap, and therefore traders interested in the carry trade event are driving the pair. Just as a side note, a positive swap means that each and every trading day the longs in the pair will receive an interest, or a swap, proportionate with the amount invested in the trade.
Because of that, audcad moves are most of the times pointless from a technical analysis point of view and quick spikes in both sides are the name of the game.
The economic releases to watch when trading this cross are: – any Chinese data related to PMI and GDP as they show key levels and information regarding how the Chinese economy is moving; – RBA (Reserve Bank Of Australia) meetings and press conferences; – CPI (Consumer Price Index) or inflation as this is what matters the most for any central bank; – PMI’s in Australia and consider the fact that they are showing the changes in three different sectors (Construction, Services and Manufacturing); – raw material and commodity prices.
To make things even more interesting, the CAD as a currency is strongly influenced by the oil market and oil price changes are reflected by CAD fluctuations. Therefore, look for changes in oil inventories levels and OPE meetings should be on the list of the events to watch.
Important Economic Releases To Watch In Australia
AS mentioned above, Australian economy is highly dependent on what is happening with the Chinese economy and with commodity prices so if anything, one should know all the time what the Chinese economy is doing and how gold, platinum, palladium, copper, iron, etc are trading as they will have a strong influence on the AUDUSD pair.
Besides that, PMI’s (Purchasing Manager Index) releases are coming in three different parts, one for each sector: services, construction and manufacturing. Any release above the fifty level shows bullish conditions for the sector while a dip below fifty signals troubles as recession is showing its teeth.
Employment data and GDP (Gross Domestic Product) are also key economic releases but more important in the Australian dollar case are central bank’s interventions as recent examples show Governor making dovish statements when it comes to the Australian dollar and even giving targets for the appropriate value and markets are taking them as granted.
Important Economic Releases To Watch Out Of Canada
As mentioned above, everything related to the oil industry, like US rigs count, levels of inventories, OPEC meetings, OPEC production levels, etc, are information every USDCAD trader should know when are going to be released as the pair will move sharply on this release.
Ivey PMI in Canada is the only PMI that is calculated (when compared with US, Europe and Australia where at least two are used) and it is important as being a single release it is basically showing the state of the economy, if it is expanding or contracting, with the 50 level being the line in the sand between contraction and expansion, or recession or boom.
The classical releases should be watched as well like the Retail Sales, GDP (Gross Domestic Product), Manufacturing data, etc, but if I choose to pick the most decisive factor besides Bank of Canada interest rate decisions, it will be oil.
Speaking of Bank of Canada, any meeting is being followed by a press conference and during the press conference questions are being asked and therefore volatility is increasing.
What To Expect From Economic Releases
Expect a currency pair that is moving somehow with the same speed like the EURGBP cross is moving and if actual is bigger than the forecasted value on the red economic events, then the fall or rise should be sharper, otherwise ranging is mostly common.