NZD/CAD
The New Zealand dollar has undergone a key shift in the near term. Eamonn reported on the rate announcement as it happened here and drew our attention, amongst other things, to the key shift in language that the Official Cash Rate (OCR) was to stay at it current rate for longer than they had previously projected. This graph, from the RBNZ, shows the difference in the projected OCR path. So,a lower for longer message from the Central Bank.
The reaction has been steady NZD selling since the announcement last week and I anticipate that bearish sentiment to carry on for this week.
The Canadian dollar has been bid on a steady stream of positive news. It had a great headline jobs report out at the end of last week, but the main increase in the jobs number was from part time employment. Adam reported on that as it happened here. However, this is not enough to ruin the outlook for the CAD by any means, so we can expect near term strength as the market looks to another potential hike out of the BOC. However, there is one factor to consider when trading the CAD and that is the NAFTA deal that is still outstanding. President Trump spoke at a fundraiser yesterday and made some positive noises about moving the NAFTA deal along with Canada. Canada's finance minister was out yesterday too signalling Canada's keenness to get a deal done as soon as possible.
So, keep alert for positive developments or otherwise on the NAFTA deal as that is currently restraining Canadian dollar strength. If NAFTA is resolved we will see further near term CAD strength. With that being said, here is is the NZD/CAD chart below. A good technical place for an entry would be in the region of 0.8700. It has the Weekly pivot and the H1 100 and 200 MA's in that same region , as well as the 50% fib from the initial drop down on the dovish RBNZ.
