What’s up forex fiends! NZD/CAD moves up the watchlist for a potential position play with top tier economic updates coming soon from both New Zealand and Canada.
NZD/CAD Breaking Minor Support?
This week, both the New Zealand dollar and Canadian have potential catalysts to get their respective currencies jumping in the next couple of days. The more notable update is likely the latest GDP data from New Zealand (Mar. 17, 9:45 pm GMT), and with leading indicators giving us a mixed picture at the moment, it’s likely the read could give the Kiwi a boost of volatility, especially if GDP comes in far below the 0.2% q/q expectations.
And from Canada, we’ll get the latest inflation data, which has been trending higher since the end of 2020. If we do get another positive read, this will likely add fuel to the recent rally in the Loonie, likely driven by both position economic developments in Canada (e.g., Canada sees blockbuster February job gain, Canada’s Ivey PMI climbs to six-month high) and rising oil prices.
This has shifted sentiment on NZD/CAD to the bearish side, enough to take the market down from recent swing highs just above the 0.9300 handle to retest a strong area of interest around the major psychological level of 0.9000.
We think that move is likely to still have legs with no major shift expected to broad market themes, and if we see the scenario where Canadian inflation ticks higher (thus putting further pressure on the BOC to tighten) and if New Zealand’s GDP update disappoints, that break below 0.9000 will likely hold and traders could jump in to take the pair to the next support area around 0.8600 to 0.8700 over the next few weeks.
What do you all think? Are you watching NZD/CAD for a move lower? Or do you think the recent sell off is overdone and the pair is ready to bounce from current levels? Let me know in the comments section below!
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