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Sideways movement for the NZD/CAD pair

Written by Sam Coxhead on August 18th, 2011.      0 comments

10:15 AM (NZT) This NZD/CAD has not been up to much so far this week, having traded a range so far of .8134 to .8291 and is currently at .8199. Thankfully the markets have stablised a little bit as the volatility takes a bit of a breather. There have been mixed signals from the markets so far this week, with equities muddling around and generally interest rates moving lower and a slightly softer USD. All in all, the market is mostly seeing sideways movement with a lack of direction.
There is little in the way of NZ domestic economic data this week. In Canada the focus will be on Friday’s Canadian monthly inflation numbers, although I expect that these too will have limited impact.
Next week should see a little more action with quarterly inflation expectations due from the Reserve Bank of NZ (RBNZ) on Tuesday, followed by NZ retail sales numbers on Thursday. Canadian retail sales are also due and will be released on Wednesday. Probably of most importance will be any headlines that emerge from the Central Bankers Symposium in Jackson Hole commencing Friday for the weekend. There are a few commentators that are predicting that the US Fed Chairman Ben Bernanke may announce some measures with regards to US monetary policy, and this would most certainly get the markets moving.
In terms of the price action from the current level, on the downside we can expect initial support at .8100, and then stronger support at .8020. To the topside resistance will come in around the .8280 level and then obviously up towards the recent highs at the .8400. I do not expect the NZD to charge ahead on its own accord, but the AUD has seen a little appreciation through resistance levels overnight and this may drag the NZD higher with it. There is much uncertainty in the AUD market currently with the interest rate market pricing at odds with rhetoric from the Reserve bank of Australia. Hopefully we start to see a little more clarification over this in the coming weeks. The AUD can lead the NZD at times when there is little domestic economic data in NZ, as Australia is NZ’s largest trading partner.