The Australian trade balance for November shocked traders. Market consensus sought a deficit of around $500 million, an improvement from October’s $1.5 billion deficit. Instead the release showed a surplus of $1.24 billion AND October’s deficit was revised downward. Despite a muted market reaction, this is unambiguously good news for the Australian economy.
It also means that demand for AUD is higher than previously thought.
This brings us to AUD/CAD. Some traders favour this pair due to a higher level of similarity between the two economies. Both have significant resource sectors, a trade factor that affects both currencies. Recent divergence between the price and the RSI could indicate a trend change in the pair, and today’s trade data could add to the positive outlook.
The bounce off 0.9600 support could be a corrective move in a longer down-trend. I’ll wait for confirmation of a new up-trend. In my view trading above 0.9800 would confirm. I’m a buyer at 0.9810, with a stop loss at .9762, and a profit target at 1.0080.
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