AUD/CAD Bullish Momentum Likely Continue Amid Forecast of Steady Inflation in Australia

Home » AUD/CAD Bullish Momentum Likely Continue Amid Forecast of Steady Inflation in Australia

Australia – Consumer Price Index

On Wednesday, at GMT 12:30 a.m., the Australian Bureau of Statistics will release the quarter-over-quarter consumer price index (CPI) figure. It measures the changes in the price of goods and services bought by Australian consumers in the last quarter.

The consumer price index primarily measures inflation levels in the Australian economy. Any significant change in the CPI often makes the Forex market extremely volatile. Also, inflation at the retail level has a big influence on the central bank’s future monetary policy. Hence, it is considered by Forex traders to be a leading indicator of the Australian economy.

Last quarter, the Australian consumer price index increased by 0.8%. The forecast for this quarter is that it will increase of 0.8% as well. 

Canada – Overnight Rate

The Bank of Canada will release the overnight rate on Wednesday afternoon, at GMT 2:00 p.m. The overnight rate is the interest rate that banks and other financial institutes in Canada use to lend and borrow funds among themselves.

Forex traders consider the overnight interest rate to be the paramount factor in the valuation of the Canadian Dollar against other major currencies. In fact, it is often stated that binary options traders analyze all other fundamental data just to predict the future interest rate decision. Hence, any major change in the overnight interest rate may create large price swings on Wednesday.

Last month, the Bank of Canada kept its overnight rate at 0.25%. Analysts are expecting the BOC to keep the rate at 0.25%.

AUD/CAD Forecast

Since October 10, 2021, the AUD/CAD remained bullish. Over the last two weeks, it has climbed up by around 200 pips or 2.18%. Earlier today, it broke above the resistance near the 0.9278 level. Currently, it is consolidating above this pivot zone. If the bullish momentum continues, it will likely find the next resistance near the 0.9316 level. The 0.9316 level was the high from September 20, 2021.

The Australian CPI figure will likely grow at the same pace as last quarter, at 0.8%. By contrast, analysts are expecting the Canadian overnight rate to remain unchanged at 0.25%. Hence, the direction of the market will likely remain dependent on technical momentum this week. If the AUD/CAD closes above the resistance near 0.9316, it would likely attract additional bullish momentum in the market.

Hence, binary options traders should look out for trading opportunities above this major resistance level around 0.9316.

Asif worked as a prop trader for almost a decade, and later he managed trading operations for one of the largest foreign exchange strategy developers in Europe. Currently, he works as a trading consultant to several brokers and writes on various tech and financial topics. You can reach him at contact@asifimtiaz.com

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