USMCA finalised and RBA on hold as expected
A good pair to trade today is the AUDCAD pair since there are different pressures on both currencies. We want to to pair strong currencies against weak currencies in order to identify pairs to trade. This pair have opposite pressures on them and an AUDCAD short makes sense in the near term. Let's take the CAD first.
CAD is being bid on the NAFTA or, as it is now called, the USMCA agreement being reached between the US, Mexico and Canada. For sometime the uncertainty of the deal was weighing on the CAD and the strengthening domestic outlook was having to play second fiddle to the international trade uncertainty. Not anymore. CAD is going to continue to be bid in the near term and pullbacks should be viewed as buying opportunities.
Conversely, the AUD is slightly weaker on the Chinese industrial data on out from the weekend showing a slowdown in Chinese manufacturing. Global trade tensions between China and the US is starting to weigh on Chinese manufacturing as the uncertainty in tariffs is leading to an inevitable slowdown in manufacturing. This has weighed on the Australian dollar and, with the RBA coming out pretty much as expected, it has continued to decline. There is nothing to halt that decline in the near term, save an improvement in the US China trade war which doesn't look very likely in the short term. (Although ultimately the deal will be done, it is just a question of when).
So, let's take a technical look at the chart. Looking at the 15 minute AUDCAD chart there is one ideal place to short and that is at the confluence of the bottom of Sunday's gap, the R1 pivot point and the 200EMA on the 15 minute chart just below the 0.9300 level
