The Canadian dollar pares its previous gains from its Australian counterpart today as the Asian commodity dollar racks up its valuation on modest gains in Asian equities. Recent news of economic revival in China – Australia’s biggest trading partner – has been buoying risk sentiment in Asia as well as other markets across the globe. On the other hand, Canada wanes after registering a weak trade balance in last Friday’s report. Traders are likely to await the release of the Bank of Canada Business Outlook Survey today.
Statistics Canada reported a C$1.96 Billion trade deficit in November, which was up from a revised C$552 Million shortfall in October. The median estimate was for a drop in the deficit to C$300 Million. It was notable that trades in crude oil, the nation’s biggest export, fell in the period. Similarly, the United States, which happens to be the Maple Leaf’s biggest trade partner, posted its largest trade deficit since April. The gap unexpectedly widened 15.8 percent to $48.7 Billion, when the median forecast was for a narrowing to $41.3 Billion.
Today, the Bank of Canada has the Winter Business Outlook Survey up for release, which could aid the prospects of the Loonie, albeit only slightly. The autumn survey suggested that firms have tem¬pered their expectations for business activity in an environment of slow global economic growth and uncertainty about demand. A decline on the balance of opinion on investment has been observed despite still being positive. Should the winter survey hint at a more positive tone, the Loonie could probably take in some gains. Otherwise, the Aussie is seen to take further advantage.
Meanwhile, Asian stocks were slightly higher today, helped by a 3 percent boost in mainland Chinese shares amid the light trading volume. The FTSE CNBC Asia 100 index inched up 0.1 percent. China shares rebounded on Monday to close at their highest level since June after a top securities regulator said Beijing could significantly increase the quota for foreign investors to invest in mainland markets. Australian shares inched up 0.2 percent on Monday as investors turned their eyes toward the US corporate earnings season.
A buy position is suggested for the AUDCAD to start the week’s exchanges in line with the fundamental news above. Be cautious still of probable technical price corrections.