The AUD/CAD pair fell during the session on Tuesday, but as you can see got a bit of a bid at the previous hammer that had formed at the absolute low that we've seen recently. It appears that the 0.9650 level is offering a bit of support, and as a result the market formed a nice looking hammer. However, the candlestick from Monday is a shooting star and we are of course in a very strong downtrend. Although I believe that this market is a bit oversold, and the fact that we have formed a hammer on top of the previous hammer from last week suggests that we will more than likely break through that shooting star.
However, above there we have the parity level which has been a site of significant clustering previously, as you can see earlier this month we had a lot of sideways action. Nonetheless, I feel that this market should see quite a bit of resistance in the general vicinity, and the fact that the Australian dollar has been so beat up recently suggests that waiting for a move up to that area is in fact the prudent thing to do. Simply put, we would either hold resistance there, or we will break through which of course would be a momentum changing event.
Perhaps it's the gold market. Or maybe copper. Or maybe iron.
One of the things that drives the Australian dollar more than anything else is hard assets prices, especially when it comes to metals, both base metals and precious ones. This is mainly because of the Aussies export so much to Asia, and what has been really harming the Australian economy is the fact that China has been slowing down. That being the case, I feel that the Australian dollar will continue to suffer as a result, while the Canadian dollar is more tied to the US economy. The US economy is doing fairly well, and as a result the Canadian economy should do relatively well. Unfortunately for Australia, the United States as a long way away.