nzdcad stages significant breakout 2676412016

As market participants continue to prepare and position themselves up for the big central bank meetings on Wednesday, most of the attention is understandably going to be on the yen, dollar, gold and stock markets. However, this is not everyone’s cup of tea. Clearly some traders will want to avoid the drama altogether and concentrate on established trends that probably won’t be affected by the BoJ and/or Fed meetings. For FX traders, this means currency crosses like the EUR/GBP or GBP/CAD, for example.

But one particular FX pair that is catching my eye at the moment is actually the NZD/CAD, which admittedly may well be impacted by a central bank decision this week – one that will understandably be overshadowed by the BOJ and Fed: the Reserve Bank of New Zealand. The RBNZ, unlikely to make any changes to interest rates, will be releasing its policy statement three hours after the FOMC publishes its own statement on Wednesday evening.

Recently, the RBNZ dropped its dovish bias and turned neutral as it strongly suggested that it may be unable to cut interest rates again for some time. This has helped to underpin the New Zealand dollar across the board. Meanwhile concerns about oversupply and a stronger US dollar have been among the factors weighing on crude oil prices once again in recent times. With crude oil being Canada’s top export commodity, this has undermined the Canadian dollar.

Because of these fundamental factors, the NZD/CAD has managed to break out of a major consolidation pattern to the upside, above the 0.9550-0.9655 resistance area. If the NZD/CAD can sustain its gains above this zone then we could see significantly higher levels in the coming weeks and months. A couple of near-term bullish targets include 0.9835-45 area (where two Fibonacci extension levels converge) and then parity (1.00). The point of origin of the breakout around 0.9650/55 area should be the new support to watch. An additional support area is seen around the 0.9550/80 area, below which our bias would then turn bearish.

From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.

City Index is a trading name of StoneX Financial Pty Ltd.

The material provided herein is general in nature and does not take into account your objectives, financial situation or needs.

While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments.

StoneX recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment further CFD investors do not own or have any rights to the underlying assets.

It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.cityindex.com/en-au/terms-and-policies/, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. Our Target Market Determination (TMD) is also available at www.cityindex.com/en-au/terms-and-policies/.

StoneX Financial Pty Ltd, Suite 28.01, 264 George Street, Sydney, NSW 2000 (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.