Day two: our potential AUD/CAD trade

Overnight we saw a very poor Canadian IVEY PMI (manufacturing) report, which at 46.9 was a huge miss against consensus and showed strong contraction.

Source: Bloomberg

On a more positive note we saw a strong building approvals report and the Bank of Canada’s Q2 Business Outlook Survey, which highlighted some very positive trends in the Canadian economy, with 24% of the firms which were surveyed expecting sales over the coming 12 months to increase.

AUD/CAD rallied to a high of 1.0014, testing the May 28 low of 1.0009 and the 23.6% retracement of the recent sell-off. Recall I suggested looking to sell rallies to 0.9995.

At 11:30am today we get NAB business confidence, although there is no survey so traders can’t really position for the release. Stochastic indicators are still below 20, thus price should stay weak and I continue to feel downside risks remain for this pair.

At 10:30pm we get Canadian housing starts (June), with economists expecting a 4% decline in starts to 190,000. A good number here could push AUD/CAD lower.

Click to enlarge

The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication.