NZDCAD Breakdown Looking Good
The drop off in risk assets across the week has benefitted our NZDCAD sell idea very nicely. Price has now broken through the initial target at .8475 and is on course to test the .8351 termination point next week. While oil prices have been a little lower into the back end of the week, weighing on CAD, the currency remains favourable to NZD given the hawkish expectations ahead of next week’s BOC meeting. The market is widely expecting the BOC to raise rates when it meets next week, which should keep NZDCAD weighted in the near term, allowing for a healthy continuation lower.
The breakdown below the .8553 level marks a very bearish development for NZDCAD. With price continuing lower within the large bear channel, and with RSI and MACD lower also, the focus is on a continued push to the downside with the .8351 level and channel low the next support region to note. It will be important to monitor risk flows and the BOC meeting next week. However, should risk assets remain pressured and should the BOC deliver with a hike, there is room for this current move to extend lower towards .8242. On other hand, if the BOC refrains from a hike, it will be prudent to cover shorts as we will likely see some backlash lower in CAD.