NZD/CAD to Break 95 Cents

NZD/CAD to Break 95 Cents

NZD/CAD to Break 95 Cents

NZD/CAD collapsed today after OPEC announced its first production cut in 8 years. According to OPEC sources, output will be reduced by 750k barrels to 32.5 million barrels a day. The cut won’t take place until November and a committee will be set up to determine the level of reduction for each member. Oil prices jumped more than 4.5% in response and the highly correlated Canadian dollar soared as a result. While we wouldn’t be surprised by some back peddling between now and November, this is a historic moment and one that should have a lasting impact on the Canadian dollar. We expect USD/CAD to drop to 1.3000 and even greater losses for NZD/CAD thanks to the RBNZ’s dovish bias.

The currency pair has broken below the 20-day SMA and the next stop should be 95 cents. We don’t see any significant support for the currency pair until the 50-day SMA at 0.9450. Any retracements should be limited to 96 cents and probably even capped at the 20-SMA at 0.9570

Chart Of The Day

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