The Australian Dollar/Canadian Dollar pair is obviously not a major, nor is it commodity pair, despite the fact that the economies of both countries involved are based on commodity exports. The large geographical distance between the two countries and the low trading volumes relegate the pair to minor status.
The AUD
As said above, the Australian Dollar is powered by the commodity exports of the country. These commodities include – but are not limited to – Oil, LNG, Gold and Iron ore. Besides its exposure to commodity prices, the AUD is also an excellent avenue for diversification, on account of its exposure the Asian markets.
The AUD derives its stability from the stability of the country’s government and the prevailing political system.
Currently the 6th most traded currency in the world, the AUD was introduced back in 1988, pegged to the GBP.
The CAD
The history of the Canadian Dollar is a long and bumpy one. The Canadian Pound was the first national currency of Canada introduced in 1841, pegged to the GBP, in a reflection of Canada’s belonging to the British Commonwealth. The practicality of this currency was questionable from the get-go though, and as trading with the US increased, the move to the dollar was made.
Backed by a stable government and a commodity-based industry, the CAD became the 7th most traded currency in the world by 2007. The main commodities exported by Canada are various forestry products, crude oil and base metals.
AUD/CAD Analysis
Given that we’re talking about two commodity-based economies and currencies here, the commodity prices have an obviously big impact on the evolution of this pair. Another factor to watch is the strength of the USD. Whenever the USD gains momentum, it has a tendency of throwing both the CAD and the AUD off their highs.