Chris looks at the upcoming June 17 session in our NZD/CAD forecast. While not one of the more major pairs that we trade, the truth is both of these currencies are major currencies, meaning that they should be able to be played against each other. There is a reasonable spread in this market, and an excellent trend.
The New Zealand dollar is falling apart against many currencies around the world, and the Canadian dollar is no different. There are a couple of different reasons to believe that this pair will continue to go lower, based upon the 0.8 5 level giving way. We have recently made a fresh new low on the monthly chart, and are pressing against a very significant downtrend line.
The pair has made a “M” pattern on the monthly chart, which is about as bearish as he gets. The New Zealand dollar has been pummeled by an interest-rate cut recently, and now we have an oil market out there that looks like it wants to try to do something. If we can get higher oil prices, that should tilt the scales even more in favor of the Canadian dollar going forward. If that’s the case, we don’t see any reason why this trend doesn’t change completely and we just fall apart.
The swap is going to be nominal at best, and not really a concern for us. This is more or less the potential investment type of trade, as we think that this market can really start to accelerate to the downside with just a few variables falling into place. With fact, we like this trade to the downside quite a bit, but do not have an urge to jump in right away. A break down below the 85.50 level would be needed, or even better yet a move below the 85 handle. Either way, it looks like this market is in trouble.