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Transferring Australian dollars to Canada? quick thoughts on the AUD/CAD pair

Written by Sam Coxhead on July 15th, 2011.      0 comments

2:43 PM (NZT) The AUD/CAD continues to rumble around in its familiar range, albeit in quite a volatile manner this week.
The USD dollar has led much of the volatility with the CAD’s close association with it.
US Fed Chairman Ben Bernanke has been making his semi-annual report on Monetary Policy to the House and comments regards the proposition of further Quantitative easing really got the market going. He stated that QE remained on the table, but later on expressed that the hurdles would be very high to see it come again into action. In the interim the US dollar saw substantial selling pressure and this saw the AUD/CAD bounce from the support levels just above 1.0200 to consolidate mid range where it currently is at 1.0300.
In my view the 1.0200 support remains the key, a break down through this level opens up the way for a move lower back towards parity. Levels above the 1.0200 level remain levels at which offer very good value buying of CAD with AUD.
The other factor effecting the view on the US dollar was the fact that Moody’s have placed the US credit rating on negative watch until they have sorted the raising of the debt ceiling, and in news just on the headlines, S&P have placed the US on credit rating negative watch also, and places the chances of a rating downgrade at 50% in the next 90 days even if a deal on the debt ceiling is met.
Next week we the Bank of Canada Monetary Policy report and the Reserve Bank of Australia Monetary policy Meeting minutes. Both of these will be closely watched and may provide some volatility.
As we come into summer in the northern hemisphere the markets become markedly less liquid and moves can be accentuated, so we can expect the volatility to continue.