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AUD/CAD rebounds as RBA signals readiness to tighten further
The Reserve Bank of Australia indicated it could tighten again if the oil-driven inflation shock lifts expectations, while the Bank of Canada left its overnight rate at 2.25%.
The Australian dollar has regained most of its end-of-June losses against the Canadian dollar, after AUD/CAD touched three-month lows while Middle East tensions escalated, according to Action Forex.
Action Forex reports the Reserve Bank of Australia’s Assistant Governor Sarah Hunter said the board stands ready to tighten further if a recent oil shock feeds into inflation expectations, and it pointed to resilient business surveys and a modest improvement in consumer confidence suggesting the economy is holding up better than feared.
The Bank of Canada delivered a similarly mixed message this week, holding the overnight rate steady at 2.25% while upgrading medium-term growth expectations, but also noting that instability in the Middle East continues to weigh on the broader outlook.
As a result, the pair has been trading within a range between 0.9750 support and 0.9950 resistance since April, with price action compressing into a symmetrical triangle since June, Action Forex said, arguing that a break either way could set the pair’s medium-term direction.