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The Week Ahead – Turning the corner



The increased risk appetite is a major reason why the AUDUSD has rallied

Chart of AUDUSD

As long as the market is risk-on, the Australian dollar will rally. The US dollar’s softness may continue to provide tailwinds despite lacklustre domestic data. Australia’s retail sales saw its biggest drop in over two years in December as the economy is feeling the pinch of the tightening. Further falls in house prices could further hurt consumer sentiment. Still, the full impact of last year’s rate hikes is yet to be seen, signs of a noticeable slowdown may prompt traders to pare back their peak rate expectations. For the meeting, a 25 bp rise has been planned. They will be heading towards 0.7280 With 0.6880 As the first support.

USDCAD struggles as Canada’s economy shows resilience

Chart of USDCAD

As Canada’s economy is likely to avoid mild recession, the Canadian dollar has risen. The BoC has been able to stop its monetary tightening due to cooling inflation. Market participants will shift their attention to the real economic impact as major central banks enter the latter stage of their hike cycles. Despite the rapid rise in borrowing costs in Canada, both growth and employment have proven resilient. The prophesied recession will not occur, but the…

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