AUD/CAD: Two Hawkish Central Banks, One Triangle Left to Break

The Aussie enters this week with genuine hawkish backing. RBA Assistant Governor Christopher Kent reaffirmed that tighter policy is working as intended, with markets now pricing roughly a 70% chance of one final hike to 4.60% by early next year, even as inflation eased below forecasts last quarter. That combination of commodity strength, gold, iron ore and LNG all running above forecast, and a still-hawkish central bank has kept AUD broadly supported near multi-week highs, with all eyes now on Thursday's July employment report.

The loonie tells an even stronger story. Canada's economy expanded at a blistering 3.4% annualised pace in Q2, well above the Bank of Canada's own 2.5% forecast, while July employment surged by 75,100 jobs against expectations of just 15,000, pulling unemployment down to a two-year low of 6.4%. That combination of surprising growth and labour market strength has fuelled speculation the BoC could hike if elevated energy prices persist, giving CAD real independent momentum of its own.

The result: two resource-linked currencies both riding genuinely hawkish narratives, leaving AUD/CAD's next move to hinge on which central bank blinks first.

Technical Analysis of AUD/CAD

As the chart shows, AUD/CAD has been compressing into a symmetrical triangle since early August, with a descending trendline from the 0.9926 high converging with an ascending trendline off the 0.9748 low, both meeting right around current price near 0.9847, exactly where the 100-period EMA also sits.

Bullish Scenario

Should buyers break above the descending trendline and the 0.382 retracement near 0.9858, the path would open towards the 0 level at 0.9926, a confirmed breakout that would suggest genuine momentum returning to the pair.

Bearish Scenario

Conversely, a break below the ascending trendline and the 0.5 retracement near 0.9837 would expose the 0.618 level near 0.9816, with a deeper slide risking a retest of the 0.786 retracement around 0.9786, or even the 0.9748 low that anchored this entire structure.With price coiled right at the apex of this triangle, sitting exactly on the 100-period EMA, AUD/CAD looks primed for a decisive break, will the Aussie's hawkish backing prove enough, or does the loonie's stronger data ultimately win out?

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