Forex: AUD/CAD finishes sharply lower as risk assets stumble

FXstreet.com (Barcelona) - The AUD/CAD finished the session sharply lower, down 66 pips at 1.0362. This was the lowest close (and also the first time it closed below the 200dma) since February. It was a rough day for many asset classes as both commodities and equities finished with sharp declines. Many are pointing to recent economic weakness, and the Aussie’s correlation with global growth outlook to expect further declines in the pair.

According to Greg McKenna of Global FX, It has been and remains our hypothesis that the Fed and others free money is goosing stocks higher but in the end the economy is where it is at and for assets like the Australian dollar which are still tied to the global growth outlook and perceptions of the miracle that is the Australian economy is vulnerable from this economic weakness”

The FXStreet.com Trend Index remains Slightly Bearish on the daily chart, while the OB/OS Index remains Oversold. Short term moving averages remain bearish, with price below the downward sloping 9 and 20dma’s. The RSI (14) is also bearish, sitting at 27.48 (within the 20-60 bearish zone) and showing no signs of divergences between price and momentum. Initial resistance will now be the 200dma (1.0383), while first support comes in at 1.0304 (weekly support)