Australian Dollar to Canadian Dollar (AUD/CAD) Exchange Rate Forecast to Decline as Crude Price Rises

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Canadian Dollars (CAD)

The Australian Dollar to Canadian Dollar (AUD/CAD) exchange rate dived by around -0.80% during Wednesday’s European session.

After data out of china printed particularly disappointingly, the ‘Aussie’ (AUD) softened versus the majority of its most traded currency rivals. A large decline in consumer confidence also weighed on demand for the South Pacific asset. Also, dampened market sentiment amid geopolitics in Europe compounded the Australian Dollar depreciation.

The Canadian Dollar, meanwhile, strengthened versus many of its major peers in response to rising crude prices. In addition, the ‘Loonie’ (CAD) advanced after the Bank of Canada (BOC) held interest rates despite expectations of a cut. A significant improvement to Existing Home Sales also aided the ‘Loonie’ appreciation.

The Australian Dollar to Canadian Dollar (AUD/CAD) exchange rate is currently trending in the region of 0.9430.

Australian Dollar (AUD) Exchange Rate Dives on Chinese Data

Given that Australia has a particularly close trading relationship with China, the ‘Aussie’ is sensitive to China’s economic data. Whilst China’s Gross Domestic Product fell in line with the median market forecast figure on the year, the monthly GDP failed to meet with expected growth. In addition, Industrial Production and Retail Sales declined beyond expectations.

‘Despite a headline growth rate in line with expectations, underlying economic activities appear to have softened further,’ Qu Hongbin, HSBC’s co-head of Asian Economic Research, said in a note. ‘We expect policy makers to deploy further monetary easing and other growth-supporting measures in the coming weeks.’

‘If you look at Q1, exports were poor, industrial production was poor, FAI was much slower, retail sales soft, so how can GDP in real terms still be 7 percent?’ said Kevin Lai, senior economist at Daiwa in Hong Kong.

Damp market sentiment amid geopolitical tensions in Europe also weighed on demand for the risk-correlated currency.

The Australian Dollar to Canadian Dollar (AUD/CAD) exchange rate dropped to a low of 0.9415 today.

Canadian Dollar (CAD) Exchange Rate Gains as BOC Avoid Rate Cut

With many economists speculating that the BOC would cut the benchmark interest rate in order to accommodate for low oil prices, the ‘Loonie’ advanced considerably after policymakers opted to hold the rate at 0.75%.

Rising oil prices also contributed to the Canadian Dollar gains. The higher prices can be linked to less-than-expected build of US crude stocks. ‘It’s been a good day for crude oil, and that’s helping Canada. For the moment, it looks as though crude oil is bottoming out,’ said Colin Cieszynski, chief market strategist at CMC Markets

A massive 4.1% increase in March’s Existing Home Sales saw heightened demand for the Canadian Dollar. ‘Greater Vancouver and the GTA (Greater Toronto Area) are really the only two hot spots for home sales and prices in Canada,’ CREA chief economist Gregory Klump said in the report. ‘Price gains in these two markets are being fuelled by a shortage of single family homes for sale in the face of strong demand.’

Australian Dollar to Canadian Dollar (AUD/CAD) Exchange Rate Forecast to Hold Losses

Given the lack of domestic data to curb the trend, and with market sentiment showing no sign of improvement as Greece dominates investor focus, the Australian Dollar to Canadian Dollar (AUD/CAD) exchange rate is likely to hold gains for the remainder of Wednesday’s European session.

The Australian Dollar to Canadian Dollar (AUD/CAD) exchange rate climbed to a high of 0.9572 today.

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