AUD/CAD Likely to Continue Downtrend Amid Forecast of Improving Canadian Manufacturing Sales

Canada – Manufacturing Sales

Tomorrow, at GMT 12:30 p.m., the Statistics Canada will release the month-over-month manufacturing sales data, which measures the changes in the total value of sales made by Canadian manufacturers over the past month.

Since changes in manufacturing sales affect the manufacturers’ future decisions regarding hiring, corporate spending, and overall investment climate in the country, binary options traders consider the manufacturing sales data to be a leading indicator of the Canadian economy.

Last month, the Canadian manufacturing sales figure decreased by 3.3% and the forecast for this month is currently set at -0.7% decrease.

Australia – Unemployment Rate

On Thursday, at GMT 1:30 a.m., the Australian Bureau of Statistics will release the national unemployment rate, which measures the percentage of total work force which remained unemployed over the past month.

Binary options investors consider the unemployment rate to be one of the most important fundamental indicators of the Australian economy because one of the main goals of the Reserve Bank of Australia is to keep the unemployment as low as possible. Although this is a lagging indicator, analyzing this data can help predict future interest rates and inflation situation in the country.

Last month, the unemployment rate in Australia came out at 5.7% and the forecast for this month is currently set a bit higher, at 5.8%.

Trade Recommendation for the AUD/CAD

Since forming a minor bearish outside bar (BEOB) on December 31, 2015, the AUD/CAD has remained in a downtrend. The downtrend was accelerated after the AUD/CAD broke below the uptrend line formed by a retracement move on April 22. Since April 22, the AUD/CAD price has declined by around 520 pips.

So far, the latest downward move has helped to create a sharp downtrend line, which the AUD/CAD price seems to be respecting a lot. Earlier today, the AUD/CAD price was once again got rejected around this downtrend line and the pair resumed the bearish move.

This month, as the Canadian manufacturing sales figure is expected to decline by -0.7%, which is considerably better compared to last month’s -3.3% decline, we believe the fundamental outlook for the AUD/CAD would likely remain bearish this week as well.

Under the circumstances, it would be recommended that binary options traders consider placing a PUT order for the AUD/CAD with their binary options brokers once the price closes below the 0.9375 level, which is a major psychological support level that held the price back in September 2015.

Asif Imtiaz

Asif worked as a prop trader for almost a decade, and later he managed trading operations for one of the largest foreign exchange strategy developers in Europe. Currently, he works as a trading consultant to several brokers and write on various tech and financial topics. You can reach him at contact@asifimtiaz.com

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