AUDCAD...UPTREND
Strengths of the Australian Dollar (AUD):
Australia plays a significant role in the global market for commodities such as iron ore and coal, which have experienced a notable increase in prices. The AUD can benefit from strong global demand and recent price increases for these commodities, as exports become more valuable.
RBA Taking a More Assertive Stance:
The Reserve Bank of Australia (RBA) has taken a more assertive stance compared to other central banks such as the Bank of Japan, by increasing interest rates in order to address inflationary pressures. This could potentially increase the appeal of the AUD for investors who are looking for higher yields.
Increased Bond Yields: Australian bond yields have reached their highest levels in five years, which could potentially make the AUD more appealing to foreign investors and strengthen its position.
Weaknesses of the Canadian Dollar (CAD):
Gentler Rate Increases:
The Bank of Canada appears to be adopting a more cautious approach in terms of increasing interest rates, in contrast to the RBA. This may decrease the appeal of the CAD for investors looking for greater returns.
Oil Price Volatility:
Although Canada is a significant oil producer, fluctuating oil prices can lead to unpredictability for the CAD.
SUMMARY
The AUDCAD uptrend could be influenced by the AUD's support from rising commodity prices and the potentially less hawkish stance of the Bank of Canada compared to the RBA.
Australia plays a significant role in the global market for commodities such as iron ore and coal, which have experienced a notable increase in prices. The AUD can benefit from strong global demand and recent price increases for these commodities, as exports become more valuable.
RBA Taking a More Assertive Stance:
The Reserve Bank of Australia (RBA) has taken a more assertive stance compared to other central banks such as the Bank of Japan, by increasing interest rates in order to address inflationary pressures. This could potentially increase the appeal of the AUD for investors who are looking for higher yields.
Increased Bond Yields: Australian bond yields have reached their highest levels in five years, which could potentially make the AUD more appealing to foreign investors and strengthen its position.
Weaknesses of the Canadian Dollar (CAD):
Gentler Rate Increases:
The Bank of Canada appears to be adopting a more cautious approach in terms of increasing interest rates, in contrast to the RBA. This may decrease the appeal of the CAD for investors looking for greater returns.
Oil Price Volatility:
Although Canada is a significant oil producer, fluctuating oil prices can lead to unpredictability for the CAD.
SUMMARY
The AUDCAD uptrend could be influenced by the AUD's support from rising commodity prices and the potentially less hawkish stance of the Bank of Canada compared to the RBA.
Professor C. E. Ward
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