NZDCAD – SELL – 21st July 2020

NZDCAD – SELL – 21st July 2020 (Closed)

Good morning team,

Please close the AUDCAD and SILVER pending trades.

We are moving our attention to the NZDCAD for a number of fundamental and technical reasons.

Fundamental analysis

CAD has remained strong due to increasing oil prices over the past couple of months. Oil has benefited from supply cuts and a weakening USD.

Data from Canada has also improved recently. We are set to see Retail sales tonight from Canada which is expected to reach 20% MoM. Tomorrow night Canada also provides their latest CPI data which is a measure of inflation/the cost of living.

The forecast for CPI is set at 0.9%, any result in line or above will signal a potential recovery in the Canadian economy. Increased inflation is also supported by rising oil prices since the Covid crash. This suggests the CAD may continue to strengthen inline with oil.

Additionally, leading into the important August RBNZ meeting we may see some pressure on the NZD. Bearish speculation may grow as they have previously suggested they could look at negative rates.

Technical Analysis 

NZDCAD – 4 Hour Charts

We have seen a head and shoulders formation followed by a bear flag breakout and a retest. We are now looking to SELL the pair in anticipation of a move lower.

Trade Setup: SELL – Market Execution, current price 0.8894, stop loss 0.8944 and take profit 0.8827.

Stop loss: 50 pips

Take profit: 65 pips

Trade Setup
SELL - Market Execution

Entry
0.8894

Take Profit
0.8827

Stop Loss
0.8944