The NZD/CAD pair had a slightly positive session during the day on Thursday, as we continue to meander around the 0.90 level. However, as you can see on the chart I have circled this area as the shooting star that formed at the 50% Fibonacci retracement level and the large, round, number. Because of that, it makes a lot of sense that the sellers step back in and push this market down. That being the case, I feel that if we can break down below the range on Wednesday, I would be a selling opportunity going forward. Ultimately, I think that we could return to the lows which is close to the 0.86 level.
The New Zealand dollar continues to get sold off against almost everything, so it makes sense that it would continue to suffer against the Canadian dollar as well. Keep in mind that this is essentially a “Pacific versus North America” type of situation, and although the commodity markets are not providing much of a left for the New Zealand dollar, the fact is that the proximity to the United States of course is good for Canada’s economy. Remember, Canada sends 85% of its exports into the United States so therefore this pair does tend to mimic the NZD/USD pair which of course looks very weak at the moment.
The 0.77 level is the most important level in this pair, even though it’s in the NZD/USD pair.
I know it sounds a bit odd, but that level in the NZD/USD pair is without a doubt the most important level in this market. That’s because if the NZD/USD breaks down below that handle, I feel that the New Zealand dollar will fall apart. That should translate to lower levels in this marketplace, and as a result I would be a seller if that happens, and if we move below the lows of the session on Wednesday.
Ultimately, I think is only a matter of time. However, keep in mind that we are getting close to the Christmas holiday so we could get a little bit in the way of stagnation going forward.
