The AUD/CAD pair fell after initially trying to gain during the session on Tuesday. In the end we formed a fairly short looking shooting star, but it does suggest that the 0.95 level will continue to be a resistance. On top of that, the Australian dollar itself doesn't look that hot right now. While the Canadian dollar lost a bit against the United States dollar, in the end it's a battle of relative strength, and that's what we're looking at in this chart right now. Simply put, Australians are suffering because Asia is slowing down, while Canada has the benefit of exporting oil, a commodity that seems to keep going higher.
On top of that, the Canadians have the Americans to feed and energize, and as a result they are riding the back of the strongest of the larger economies in the world. So in a sense, Canada benefits from America, as has always been the case. Of course, that cuts both ways but right now being that the Americans are supplier is a good thing.
The trend says down, and so do I.
The trends been down for a while, and top of that it's been a nice gradual downtrend, the type of move that can last for quite some time. It's not like a parabolic move where there has to be some kind of violent snapback, which is simply a nice grinding move that goes lower over time. I think that eventually we will hit the 0.90 handle, and as a result shorting at this point in time is perfectly fine for me. I also believe that this market may go lower than that, it simply comes down to what oil does, and probably more specifically what happens in Asia. If the Asian economies don't pick up soon, expect the Australian dollar to continue to be beat up on.
Going forward, I think selling rallies will be the way to go as well as selling a break of the lows from the session on Tuesday, which is extensively the 0.94 handle. As far as buying is concerned, we would have to break above the 0.9750 level for me to consider it.