Chart of the Day NZDCAD
Bullish NZDCAD - NZD: The Reserve Bank of New Zealand (RBNZ) is now in the enviable position of being able to sit on its hands for an extended period of time. The chances of inflation rising to the top of its target range are very low so rate increases would appear off the agenda. On the flipside, the RBNZ is already meeting its labour market targets and will soon hit its inflation objective reducing the need to lower rates. The balance of risk still lies toward further easing but this has been significantly reduced by the Reserve Bank’s recent acknowledgement that potential growth will slump to just 2.3%. Moreover, the RBNZ has also started talking about the financial stability risks of ultra-low interest rates.
CAD: Bank of Canada’s (BoC) forecast for growth of 1.3% in the last MPR maybe at risk given recent economic and geopolitical developments. This is an important benchmark for policy makers and it remains to be seen whether BoC Governor Poloz remains as sanguine on the outlook in today’s comments from Vancouver as he was in December. Tuesday's trade data out of Canada produced a smaller than expected deficit, though this hasn't really factored into price action.
From a technical and trading perspective, the NZDCAD has been developing an impulsive advance from its October 2019 lows. The bullish sequence appears to be incomplete, price has held symmetry swing, Fibonacci and pivot support. As .8600 continues to attract buyers bulls will be encouraged on an upside breach of .8700 setting up a retest of offers and stops above the prior swing highs sited at .8800 and on towards .8850 in extension
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Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 75% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
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Patrick has been involved in the financial markets for well over a decade as a self-educated professional trader and money manager. Flitting between the roles of market commentator, analyst and mentor, Patrick has improved the technical skills and psychological stance of literally hundreds of traders – coaching them to become savvy market operators!