The Forex market is very volatile and unpredictable, even during the calm periods. However, it’s double so during the crisis. The covid-19 pandemic caused many ups and downs over the past year. Riskier currencies suffered a lot, while safe-havens flourished. However, the new year brings new changes.

Australian Dollar is one of the riskier currencies. It finished 2020 year on a relatively strong note. The main reason for the Aussie’s rally is the recent strength in the commodity segment.

Besides, the dovish policy of the Reserve Bank of Australia had an insignificant impact on AUD/USD as other central banks were also dovish.

Analysts think that for the next several years interest rates in the developed countries will stay at the bottom. So, the Reserve Bank of Australia will probably have an opportunity to put more pressure on bond yields without hurting the Aussie dollar.

Australia’s relations with China, its main trading partner, have worsened last year. Despite that, the countries managed to prevent their relations from serious deterioration.

The outlook for the Aussie looks bullish currently. However, its future trajectory depends on the continuation of the surge in the commodities segment.

What about the Canadian Dollar?

The Bank of Canada will have to provide material support to the economy like other major central banks, at least until inflation shows some signs of life. In addition, Canada is suffering from the second wave of the Covid-19. Even though the situation has somewhat stabilized in December, this second wave of the virus may still put additional pressure on the country’s economy.

According to analysts, in 2021, oil price dynamics will be an important catalyst for USD/CAD. Commodity-related currencies, including the Canadian Dollar, will get an additional boost if WTI oil will settle above the $50 level or gain even more upside momentum.

Thus far, the outlook for the Canadian Dollar seems favourable. However, that may change if the U.S. dollar will gain strength.