AUD/CAD – A sensitive pair for risk-hungry traders

AUD/CAD is the pairing between the Australian dollar and the Canadian dollar. It represents the exchange rate between these two currencies and is currently sitting around the 0.86 mark. And since AUD is the base currency and CAD is the quote currency, that means one AUD is worth 0.86 CAD.

The pair falls under the category of forex minors, which consists of twelve pairings between major global currencies excluding USD. While minor pairs aren’t traded as often as majors, there’s still a lot of volume and volatility, especially in peak market times and around important releases. Thus, FX minors provide a stable alternative for those who aren’t interested in the sometimes rigid majors, but who also want to avoid the lack of structure in exotics.

In this article, various important information regarding the AUD/CAD pair will be presented. The goal is to help forex traders who may just be getting into the pair or into currency trading as a concept get started. As such, it will include general info about both currencies, the pair’s main drivers, reports, and trading hours to watch out for.

Australian dollar – AUD

The Australian dollar is, unsurprisingly, the primary currency in Australia. However, it’s also the official currency of its external territories:

• Norfolk Island
• Christmas Island
• Cocos (Keeling) Islands
• Ashmore and Cartier Islands
• Coral Sea Islands
• Heard Island and McDonald Islands
• Australian Antarctic Territory

As well as three Pacific Island States (these are independent and hold sovereignty) – Tuvalu, Kiribati, and Nauru.

The Australian dollar first came into use in 1966 to replace the formerly used Australian pound. Its symbol is the same as other dollar-denominated currencies ($), which is why A$ or AU$ are often used to distinguish it.

The AUD is the fifth most traded currency and the sixth most held in global reserves. It’s minted by Royal Australian Mint and printed by Note Printing Australia. Of course, it’s under the authority of Australia’s central bank, the Reserve Bank of Australia.

In forex markets, the AUD shows two primary distinguishing qualities. First, it’s what’s known as a commodity currency. In other words, since Australia is a strong natural resource exporter (coal, gold, iron ore), its economy largely depends on the price of those exports. Secondly, it’s a risk-sensitive currency, meaning that it reacts strongly to waves of optimism and pessimism.

Canadian dollar – CAD

Canada’s official currency, the CAD, is significantly older than Australia’s, coming into use in 1858. Between then and now, some offshoots also existed, but today, the CAD remains the sole official currency. Similar as the AUD, since it’s a dollar-denominated currency, it’s often called C$, or CA$. Additionally, it’s colloquially referred to as the loon or loonie.

Its statistics as a global currency are the reverse of AUD’s. It’s the sixth most traded and fifth most held in global reserves. This may indicate that financial professionals hold fairly similar sentiments about the two currencies constituting this pair.

The Bank of Canada, Canada’s central bank dictates policy for the Canadian dollar. It’s printed by Canadian Bank Note Company, and minted by Royal Canadian Mint.

The CAD shares many of AUD’s qualities, both being commodity currencies. However, in Canada’s case, the primary exports are in the energy sector, particularly oil. As such, the value of the Canadian dollar can react strongly to oil price shifts. Additionally, it’s also a risk-sensitive currency, making the pair quite volatile at times.

 AUD/CAD main reports

As most forex traders know, financial reports tend to push significant activity in currency trading. As such, many tend to predict their outcomes to capitalise on the price movement that follows.

Since AUD and CAD are both single-country currencies (unlike, for instance, the Euro), the reports are fairly easy to track. They mostly come from central authorities and are released fairly regularly. Here are some of the key reports to track.

Main Economic Reports for the Australian Dollar (AUD)

• Produit intérieur brut (PIB) – Australian Bureau of Statistics (ABS), quarterly
• Consumer Price Index (CPI) – ABS, quarterly
• Labour Force Survey – ABS, monthly
• RBA Monetary Policy Statement & Cash Rate Decision – Reserve Bank of Australia, monthly
• Balance commerciale – ABS, monthly

Main Economic Reports for the Canadian Dollar (CAD)

• Produit intérieur brut (PIB) – Statistics Canada, monthly (plus quarterly summaries)
• Consumer Price Index (CPI) – Statistics Canada, monthly
• Labour Force Survey – Statistics Canada, monthly
• BoC Interest Rate Decision & Monetary Policy Report – Bank of Canada, 8 times per year
• Trade Balance Report – Statistics Canada, monthly

Non-report Drivers for AUD/CAD

As noted earlier, AUD and CAD share some fairly similar behaviour when it comes to price movement. Likewise, there are a lot of similarities between their primary non-report drivers.

Both, for instance, move with the price of their primary exports. Gold, iron ore, and coal are the primary price movers for AUD, while crude oil (WTI) often causes CAD to shift.

Additionally, both are very susceptible to market sentiment. In times of optimism, they both tend to move up and they both tend to move down when markets aren’t as confident. Ironically, this can make the AUD/CAD pair difficult to predict, since nuances in their movement can dictate the price. A pair like AUD/JPY, for instance, is easier, since AUD tends to move down in unstable markets, while JPY tends to move up, indicating a downtrend for the pair.

Lastly, they both react strongly to changes in their primary trading partners’ economy. For Australia that’s China and for Canada it’s the US.

Peak trading times for AUD/CAD

When picking an asset, traders should always check its peak trading times to see if it suits them. Otherwise, they risk wasting hours of research for a forex pair that they simply can’t fit into their schedule. Here are some of the peak times for AUD/CAD trading:

Sessions:

• Sydney Session: Begins at 10 PM and ends at 7 AM GMT.​
• Tokyo Session: Overlaps with the Sydney session, running from 12 AM to 9 AM GMT.
• London Session: Operates from 8 AM to 5 PM GMT –
• New York Session: Runs from 1 PM to 10 PM GMT.
• Peak times:
• London and New York Session Overlap: A generally active session, this one is especially important due to Canada’s trading hours matching New York.
• Sydney and Tokyo Session Overlap: An active time for AUD pairs, as that’s when its economy is in motion. Note that the open and close of all sessions mentioned is likely to be more active than the middle.

Avertissement :
Ces informations ne sont pas considérées comme un conseil en investissement ou une recommandation d'investissement, mais plutôt comme une communication marketing.