NZD/CAD Sell
Greetings one and all. As expected the RBNZ kept interest rates on hold last night. This has helped push Monday's swing position more to the upside. In part the RBNZ was even more bearish than anticipated and Eamonn reported on CBA and the three factors that were concerning them. It seems from here that folks are starting to edge to a cut in rates being more likely than a hike. A dovish hold then for the RBNZ. Bearish NZD.
At the end of the America session Bank of Canada's Poloz came out and issued a somewhat bullish statement in the press conference. He said that one bad data point was not going to deter the bank from their path and that he does not conduct policy on speculation, so rhetoric alone is not enough to put the bank off a July rate hike. His original statement mentioned the concerns around steel tariffs and lending guidelines affecting the housing market, but his press conference had him in a more bullish frame of mind as he downplayed those concerns. It is also worth noting the surge in WTI crude after inventories showed a large draw. (I mentioned the prospect of that here earlier in the week). So, bullish CAD.
So, pairing a strong currency with a weaker currency would give us a a NZD/CAD short. I like a short from the 38.2% - 61.8% fib retracement. Stops can be placed above yesterday's highs (or the 78.6% fib level) and target recent ranges low.
Risks to the trade: Nafta news, OPEC production updates/clarification.
