Westpac analysts note that AUD/CAD cross has retraced some of its 2019 losses in August and September when the RBA took a pause from rate cuts and global risk appetite firmed thanks to easing US-China trade tensions.
Key Quotes
“The RBA’s third rate cut in this cycle in October to 0.75% ignited a another leg lower for the AUD/CAD cross taking to fresh nine-year lows (0.8856).”
“Year to date AUD/CAD has fallen 7.5% and seems set for further weakness, 0.8750 an achievable downside target during Q4.”
“CAD has been the strongest G10 currency this year, helped significantly by a rebounding domestic economy and a neutral Bank of Canada policy stance. By contrast, conditions in Australia have been weak, GDP growth slipping to a 10 year low of 1.4%yr in June and the RBA responding to the rise in unemployment.”
“US-China trade relations remain a weight on the pair. We do not expect a breakthrough in negotiations this month, reinforcing risks to 0.8750 multi-week.”
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