A commodity currency is a name given to currencies of countries which depend on the export of certain raw materials for income. The major currencies that are considered “commodity currencies” are the Australian dollar, Canadian dollar, and New Zealand dollar.
A surge in oil prices this year has helped make the Canadian dollar one of this year’s best performing major currencies. Meanwhile, the Australian dollar tends to move with the price of goal. After gold crossed over $2000, in the back half of the year, gold has lost is momentum…most likely to Bitcoin (digital gold).
According to JP Morgan Chase, the rise of Bitcoin is coming at the expense of gold. Banks and institutional that held gold as a safe haven are now flocking to Bitcoin as a safe haven and but also for its higher profit-yielding potential.
As Canada is World’s one of the largest oil exporters, its currency has a major dependency on oil price. Oil demand is decreasing due to the pandemic and with the new virus strain spreading so fast and European countries shutting down their borders, demand for oil decreases. The situation might get even worse if the spread of this new strain gets out of control and located in different countries worldwide, especially in the US.
Australian dollar, unlike its counterpart CAD, is gaining due to the rising amount of demand for gold. The weakening US Dollar, new Covid-19 variance, US stimulus package might nudge investors to purchase the precious metal.
Depsite the different dynamics affecting both the Canadian dollar and the Australian dollar, the AUD/CAD remains strong, but how much higher can this forex pair move, lets go to the charts.
Monthly Chart (Curve Time Frame) - monthly supply is 1.06000 and monthly demand is 0.79000.
Weekly Chart (Trend Time Frame) – the trend is up.
Daily Chart (Entry Time Frame) – the chart suggests to go long at the daily demand at 0.96000 with a target at 1.00000
This post is my personal opinion. I’m not a financial advisor, this isn't financial advice. Do your own research before making investment decisions.