The Australian dollar looks as if it is struggling near the top of the range against the Loonie on Wednesday.
AUD/CAD
The Australian dollar tried to rally against the Canadian dollar early during the trading session on Wednesday, but it seems to be running into a bit of resistance just shy of the 0.9950 level. That's an area that's been important for some time, so it's not a huge surprise to see that it did offer a little bit of resistance.
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Ultimately, the market has been in a range since May, and at this point in time, it's worth noting that the stochastic oscillator is crossing right at the overbought line. So, a lot of things are going on at the same time here, suggesting that perhaps we need to pull back a little bit. That probably makes a little bit of sense just due to the fact that we've been compressing in a 200-point range for a while, and we got a little close to the top of it.
Range Compression and Parity Targets
If we did break above the 0.9950 level, that could really send this market rallying, but I think the first stop, of course, would be somewhere near parity. The Australian dollar is a commodity currency, just as the Canadian dollar is, so this pair does spend a lot of time going sideways in general, so the recent action hasn't been much of a surprise.
The interest rate differential really isn't much to speak of, and therefore, one gets the impression that you could be sideways for quite a while. That's not to say that we can't have impulsive moves, but we don't have anything from either country at the moment that's overly compelling. Neither is doing too badly, nor are they doing excellently. So really, sideways is probably the most logical outcome of what we see here between Australia and Canada.
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