Australian Dollar Rises to Five-Year High Against Loonie Amid Trade Tensions

The Canadian dollar's performance against its Australian counterpart is a concerning trend that may indicate deeper market scars from the ongoing trade tensions between Canada and the United States.

According to data from the London Stock Exchange Group, the Australian dollar has risen to 0.9979 per Canadian dollar, its highest level in five and a half years.

This increase means a weakening of the Canadian currency, also known as the loonie. The next key level is the February 2021 high of 0.9993. If the Australian dollar breaks through this barrier, the market could quickly approach parity, a one-to-one exchange rate.

Technical analysis suggests that a sustained move above parity could open the way toward the March 2018 high near 1.02, followed by the November 2016 peak around 1.04. However, further gains may become more difficult near the upper boundary of a 30-year range, which lies slightly above 1.10.

Market participants may look to the 0.9897-0.9908 support zone in case of a pullback scenario. However, to confirm strengthening in the Canadian dollar, the pair would need to fall below 0.9750.