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NZD/CAD – A Test of the Yearly Highs?
Friday’s horrid Canadian employment report put the kibosh in the CAD rally with bulls now sorely deflated at it appears that the BOC will remain in its dovish stance for the foreseeable future. The very weak numbers suggest that the BOC meeting next week is likely to reiterate that rates will remain low and that inflationary pressures will not be of concern. That is likely to put further downward pressure on yields and will CAD a ripe candidate for further selling as the week progresses. Meanwhile in New Zealand the focus will be on the CPI numbers which if hotter than expected are going to raise the prospect of more rate hikes. The divergent monetary policies therefore are going to put more upside pressure on NZD/CAD and could send it to a retest of yearly highs.
Having now taken out 9450 level NZD/CAD looks ready to mount a run towards 9500. A break there opens the field for a test of the yearly highs, but a break below 9400 would suggest that the upside bias has been broken