The AUD/CAD currency pair held near a fresh 3-week high of 0.9945 on Monday, as the Australian Dollar remained firm following the latest monetary policy decision by the People’s Bank of China, while the Canadian Dollar weakened, weighed down by softer crude prices.
On Monday, the PBoC left its benchmark one-year and five-year Loan Prime Rates unchanged at 3.00% and 3.50%, respectively. Given the strong trade linkages between China and Australia, the decision is providing a supportive backdrop for the Australian Dollar, which is often viewed as sensitive to developments in the Chinese economy.
Domestic monetary policy is also lending support to the Australian Dollar. After keeping the cash rate unchanged this month, Reserve Bank of Australia Governor Michele Bullock reiterated that inflation had remained elevated and cautioned that additional rate hikes could not be entirely dismissed.
Meanwhile, West Texas Intermediate crude was last down almost 2% after the successful completion of US-Iran negotiations in Switzerland, which helped ease market concerns about potential supply disruptions.
A central element in calming those fears was Tehran’s confirmation that it had obtained key waivers for its oil and petrochemical exports, alleviating worries over constraints on Iranian supply.
Adding to the positive tone around the talks, mediators Qatar and Pakistan issued a joint statement from Switzerland noting that both countries had agreed to a structured 60-day roadmap aimed at securing a final peace accord.
The AUD/CAD currency pair was last up 0.06% on the day to trade at 0.9924.
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