AUD/CAD & AUD/USD Analyses: Australian Dollar is Performing Better than the US and Canadian DollarsCanadian GDP as per October was 0.1 bp above the expected 0.3% yet still lower than September’s 0.8%, hence the Canadian dollar is weakening these days.
As Canada is World’s one of the largest oil exporters, its currency has a major dependency on oil price. Oil demand is decreasing due to the pandemic and with the new virus strain spreading so fast and European countries shutting down their borders, demand for oil decreases. The situation might get even worse if the spread of this new strain gets out of control and located in different countries worldwide, especially in the US.
Australian dollar, unlike its counterpart CAD, is gaining due to the rising amount of demand for gold. The weakening US Dollar, new Covid-19 variance, US stimulus package might nudge investors to purchase the precious metal. As the Canadian Dollar is dependent on oil, Australian dollar is dependent on gold, as Australia is the 3rd largest Gold producer in the World.
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As seen on the chart above, AUD/USD was halted by the resistance at $0.76398. The pair was able to quickly recover and is now looking towards breaking the aforesaid resistance and continue the uptrend. Elliott Wave count on the Daily chart of the pair suggests that there should be one last impulse before the pair can go into a deeper correction and the level where this 5th wave could end is near $0.79900 as there is a strong resistance.
If AUD/USD fails to break the resistance, it should not drop below the $0.74045 – $0.74000, where an EMA50 support and previous high, which also is wave 3 are located. Nevertheless, continuation of the uptrend towards $0.79900 looks more realistic.
AUD/CAD weekly chart clearly demonstrates where the pair could stop its impulsive uptrend move, the dynamic resistance of March 23, 2013.
The Elliott Wave count of this pair also suggests the end of the motive at 0.99890. The pair is back inside that descending channel, hence the levels of this channel will play a significant role in price action of AUD/CAD.
Currently, the pair is testing an important resistance, despite the indication of overboughtness of the pair by RSI, MACD, MA100 and EMA50 acted as a support and signal the continuation of the uptrend. If the pair fails to break the current resistance at 0.97740, it might drop towards 0.96510 but never below that, otherwise the EW count would become invalid.
Both Australia and Canada won’t be publishing important economic data this year, the only drivers for the stability of these currencies will be developments in the US and Covid-19 statistics including the developments of the new variant of the virus. Unlike Australia and Canada, the United States will publish two important economic reports forecasts of which look positive, these would be Pending Home Sales (MoM) as per November and CB Consumer Confidence for December.