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NZDCAD – Flameout at .9700?
Although tomorrow the price action will be dominated by the FOMC rate decision, we also have RBNZ on tap and it could move the markets in kiwi pairs in a big way. Over the past several days NZD/CAD has been in a torrid uptrend boosted by continued carry trade flows into the kiwi and the weakness in CAD due to correction in oil.
Today, however, NZD/CAD traced out a classic shooting star formation that may be a hint of things to come if the RBNZ decides to jawbone the pair lower or worse the Fed surprises and hikes rates. A rate hike by the Fed would cause massive profit taking out of the carry while the CAD is unlikely to be sold so severely. Therefore, any sharp surprise from either central bank could push the NZDCAD pair down to .9500 while .9800 remains the upside.