Just when we thought NZD/CAD was about to break the range to the
upside, the New Zealand government hits Kiwi bulls with news of a
temporary lockdown to send NZD lower against the rest of the major
currencies. That brought NZD/CAD back firmly into the control of the
bears after the market broke below strong support around the 0.8770
handle.
Its likely the market will consolidation for the next few hours as
trader await the latest monetary policy decision from the Reserve Bank
of New Zealand. Well get that event at 2:00 am GMT, and with New
Zealand going back into lockdown, the expectations of what the RBNZ will
say just got a whole lot hazier.
Will they still hike the official cash rate from 0.25% to 0.50%？ Or
will the see the need to keep easy money conditions going as the
covid-19 pandemic continues to wreak havoc on the globe？
Whatever they decide, its likely to spark a strong move in NZD pairs
in the short-term. And with the current trend favoring the bears in
NZD/CAD, well be on the lookout for short setup in a scenario where the
RBNZ decides to hold the official cash rate at 0.25% (more rate hike
bets likely come down) and the upcoming API crude oil inventory data
shows a decrease in oil inventory. In that scenario, the area between
0.8770 – 0.8800 may draw in both technical and fundamental traders
looking to sell.
If the RBNZ does hike and is pretty optimistic that the lockdown will
be short-lived, the Kiwi could rally from current levels given that
its already given back the speculative gains leading up to the event.
NZD/CAD will likely find support down to the previous swing low around
0.8700 and bounce higher, especially if oil prices take a dip on the
inventory data.
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