The pair Australian and Canadian dollar looks stable and does not stand out with high volatility. Fluctuations in the exchange rate depend mainly on news about the economic successes of countries.
The AUD/CAD currency pair on the exchange market is classified as a currency with low liquidity, drawing a parallel with such stable pairs as EUR/USD, USD/CHF, GBP/USD and USD/JPY.
Canada is the largest exporter of petroleum products. Depending on the market price for this natural raw material, the CAD exchange rate rises or falls.
In addition to the main name of the currency, the Canadian dollar is nicknamed Piastre. Coins of 1 and 2 dollars were called loonie and toonie, but in 2013 they were no longer minted. In 2011, the federal government of Canada changed the paper currency to a polymeric currency, simultaneously combatting counterfeiters.
AUD has an unusually volatile position compared to other major currencies. An interesting fact about the Australian dollar is that in the course of the fight against counterfeiters, the government has been producing polymer banknotes since 1998.
At the end of their service life, banknotes are recycled. If you tear a note in denomination of 10 Australian dollars, the halves remain suitable for payment of $5.
The exchange rate is influenced by market relations with Asian and Indian countries. The price of AUD is directly proportional to the demand for natural resources in China, India, and Japan.
The dynamic rise in commodity prices creates inflationary pressures in most developed countries. Therefore, such moments make investors fear for the sustainable growth of the economies of Europe, North America, and Japan. While the Australian economy is stable in such cases.
Thus, AUD is positioned as an alternative for traders who want to stay afloat in the raw materials market and/or Asian demand for resources, while at the same time having a deficit in countries that could suffer due to higher costs for raw materials.
To use the AUD/CAD pair in Forex trading, it is necessary to analyze several aspects of the market in order to obtain useful information. They consist of economic issues, such as the relationship between PMI and GDP, as well as the Chinese economy.
Events involving the Reserve Bank of Australia and fluctuations in the consumer price index will show where the market is now. Changes in construction, services, and manufacturing are also relevant, in addition to changes in prices for raw materials and goods.
It is imperative to keep abreast of all developments regarding the Chinese economy in order to keep track of potential changes with the Australian dollar. This includes items such as gold, silver, platinum, copper, and iron, as they will directly affect the AUD/CAD currency pair.
As mentioned above, the construction, services, and manufacturing sectors are the breakdowns used by the PMI Manager Index. Monitoring of these releases will show upward and downward trends.
The strength of the Canadian dollar against the US dollar is largely determined by the oil industry. This includes US oil rigs, reserves, OPEC meetings, and oil production levels.
Disclosure of this information will immediately affect the AUD/CAD currency pair. Also, Canadian Ivey PMI releases immediately show the economic conditions in the country. If the PMI levels are above 50, this indicates a potential market expansion; if levels are below 50, there is a greater risk of recession.
In addition to the impact of oil on CAD, releases such as retail sales, gross domestic product, production data, and Bank of Canada interest rates also play an important role in CAD exchange rates and must be constantly monitored.
These factors will indicate the strength of AUD and CAD, used together as a commodity currency pair, and should form part of trading research and trading strategies.