AUD/CAD Bears Remains in Control Amid Rebounding Manufacturing Growth in Canada

AUD/CAD  Forecast & Technical Analysis

Canada – Manufacturing PMI

On Thursday, at GMT 2:30 p.m., the Markit released Canada’s manufacturing purchasing managers’ index (PMI) figure. It measures the level of a diffusion index by surveying around 400 purchasing managers in the country.

Businesses are the first to react to changing economic climate. The manufacturing PMI is calculated based on survey questions covering employment, production, price levels, new orders situation. Also, it is based on inventory conditions. Hence, High Low traders consider this data to be a leading indicator of the overall economic health of the country.

Last month, Canada’s manufacturing PMI reading came out at 47.8. This month, it went above the 50 thresholds and came out at 52.9.

Australia – Trade Balance

On Tuesday, at GMT 1:30 a.m., the Australian Bureau of Statistics released the monthly Trade Balance figure. It measures the difference in value between all import and export. This figure also includes physical goods and intangible services.

The demand for export correlates with the demand for the Australian Dollar. Therefore, binary options investors analyse the monthly trade balance. They do so to gauge the strength of the AUD against other major currencies.

Last month, the Australian trade balance figure came out at 7.34 billion. This month, the forecast was set at 8.80 billion. However, the actual figure came out much lower, at 8.20 billion.

AUD/CAD Forecast

AUD/CAD Forecast - Monthly Chart - August 5 2020
The AUD/CAD remained in a strong uptrend over the last several months. Last week, it reached a high near 0.9700 and formed a bearish outside bar. Consequently, the AUDCAD fell towards the support near 0.9500. Yesterday, it tested this support but failed to penetrate below it. Currently, it is trading just above the support near 0.9500.

The Canadian Manufacturing PMI went above the 50 levels and came out at 52.9. On the other hand, the Australian Trade Balance came much lower, at 8.2 billion against a forecast of 8.8 billion. We believe it would set a bearish fundamental outlook for the AUD/CAD this week. Therefore, if the AUD/CAD closes below the support near 0.9500, it would likely attract additional bearish momentum in the market.

Hence, Australian binary options traders should look out for trading opportunities below this major support level around 0.9500.

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