The NZD/CAD pair initially fell during the course of the day on Friday, but drove much higher and finally reached the 0.90 level, an area that I have been talking about for some time now. However, we broke out above there and now it looks as if the pair is ready to continue going higher. We pulled back a little bit towards the end of the day, but quite frankly there is enough bullish momentum that we reached the 0.9050 level. Because of this, I think we are going to continue to go higher, and a break above the highs for the session on Friday is reason enough to go long. Pullbacks should represent value, and at this point in time I have absolutely no interest whatsoever in selling.
Ultimately, one of the biggest problems with this pair falling is that the Canadian dollar is so highly sensitive to the price of oil. With this being the case, we have to keep in mind that the OPEC meeting did not end well for pricing power. After all, several of the OPEC members have suggested they will not cut production, and this is a market that is oversupplied by 1.5 million barrels a day already. Because of this, oil will not have pricing power and we should continue to go lower. Keep in mind that the Canadian dollar is a proxy for currency traders and as a result this market should continue to favor the New Zealand dollar.
Ultimately, if we can break above the top of the range for the session on Friday, we believe that this market should go to the 0.94 level over the longer term. Yes, there will be pullbacks from time to time, but given enough time it looks like that’s where we will go. In fact, I believe there is a massive “floor” in this marketplace underneath the 0.88 handle.