The AUD/CAD currency pairing is a representation of the amount of Canadian dollars (CAD) that can be bought for every Australian dollar (AUD).
A number of factors impact on the standing of this currency pairing, with markets responding daily to news regarding the state of the relative economy in each country.
In addition, macroeconomic developments which impact on global markets can result in shifts for the currencies, highlighted by investor fears that have plagued international forex trading concerning recent debt issues in Europe.
AUD is the fifth most-traded currency in the world, while CAD is the seventh. Factors which specifically have a bearing on this pairing include economic policy in both Canada and Australia, as well as the relative strengths of those economies in international markets.
In Canada, the country is blessed with large reserves of a number of global commodities, with activities in the timber, oil and natural gas sectors have a direct bearing on the standing of CAD.
Meanwhile, Australia also benefits from an abundance of natural resources, with gold, iron, coal and aluminium all to be found in the country. It also has a very large agricultural sector, with farming one of the most important industries, providing an abundance of wheat, beef and wool in particular.
However, the relative isolation of Australia in terms of its global position means the country is often highly reliant on the import of other essential goods that cannot be produced domestically. As a result, this can lead to large trading deficits for the country, which in turn can apply a downward pressure on AUD in forex markets.
The currency pairing is therefore strongly linked to global commodity prices, with gold perhaps one of the most important factors for investors to monitor.
Australia is presently the third largest producer of gold in the world and as a result, its currency had an 84 per cent positive correlation with the precious metal between 1999 and 2008