Forex Investment and Currency Trading

AUD/CAD has found stability around 0.80 after plunging 20% between July and October. Global equities followed a similar trend, suggesting that equities might have supplanted rate spreads as a key driver of AUD/CAD. Indeed, the correlation between equities and AUD/CAD has increased significantly through Oct 2008. However, this tighter correlation did not come at the expense of interest rate spreads but rather reflected a critical underlying concern that was driving both the equity sell-off and the narrowing AU-CA spread: fear of a protracted global recession. Not surprisingly, the correlation between AU-CA 2-yr spreads and the MSCI world equity index increased [...]

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FX: Support at 0.9182 and 0.9102 is expected to attract buying interest in AUD/CAD for an attempt to pierce nearby congestive resistance at 0.9370. A daily close above this pivot point would sustain the current uptrend,targeting 0.9513, followed by the ascending channel top at 0.9573.
AUD/CAD has been trending higher in an orderly fashion since late December, after the formation of a triple bottom established a firm base for the cross.
Recent price action has been consolidative in nature, with good support at 0.9102 containing pullbacks.
With the daily studies displaying upward momentum from neutral levels, we note that prices are nearing an [...]

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Global rate markets are moving in a manner that suggests growing confidence in decoupling global growth prospects. While this confidence may ultimately prove misplaced, history suggests running with it for several months, if not quarters.  Long AUD/CAD is the key way to play this theme, whilst at the same time reducing USD risk and reducing commodity price risk. Buy on an upside break of the recent range around 0.9380.
Look for an AUD/USD appreciation to 0.94 and possibly higher.
But, as the events of the last week highlight, USD spot rates are vulnerable to sudden shifts in USD sentiment in a [...]

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FX Bottom-line: During the last 3 months, CAD has struggled on the crosses with
the currency unable to benefit from still elevated commodity prices as it continues
to trade largely in line with the USD, underperforming most G10 currencies.

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