3 Compelling Reasons I’m Looking For An Entry Point In NZD/CAD
While the dollar index
(
DXC |
Quote |
Chart |
News |
PowerRating) continues to
wrestle with solid support at 87.37 as well as ample sellers at 88 and 88.15, it
might be time to consider a trade that is less correlated with moves (or in this
case lack of moves) in the DXC.
While we were stopped out of this longer-term short last week, we are currently
seeking another entry point in NZD/CAD. As noted in the chart below, there are
ample reasons to be bearish from a technical standpoint, however, if one takes a
view from a macro perspective, there is a compelling story here too.
– Interest rate differentials between Canada and New Zealand are likely to
contract with the RBNZ on hold and more likely to cut rates — while the RBC is
likely to move towards a tightening policy
– Current account deficit in New Zealand versus a surplus in Canada
– Sustained higher oil prices will benefit the Canadian dollar
As always, feel free to send me your comments and questions.
Dave Floyd is President of Aspen Trading Group, which provides research/trade
ideas on the FX and equity markets as well as analytical software. Aspen Trading
Group is based in Bend, OR.