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NZD/CAD – More Pain to Go?
The NZD/CAD pair has been a one way trip to the downside declining more than 1000 pips over the past several months as RBNZ has grown decidedly more dovish while the BOC has remained neutral. The New Zealand economy has been hit hard by the slowdown in China and the marked decline in dairy prices. Yesterday’s disappointing GDP numbers were just the latest example of economic problems in New Zealand that will likely lead to further easing by the RBNZ.
Meanwhile in Canada the situation has stabilized as oil prices have found a bid at the $55-60/bbl level and the general uptake in North American economic activity has spilled over the border to keep the Canadian economy chugging along. This week’s strong Wholesale numbers suggest that tomorrow’s Retail Sales data may beat to the upside and propel loonie to more gains.
Although NZDCAD may have found a short term bottom for now it’s unlikely that the 8400 level will hold and the pair could slide towards 8200 over the next several weeks.