The New Zealand dollar has fallen a bit over the last several weeks, and then started to consolidate against the Canadian dollar. I think that at this point the down trending channel is obvious on the weekly chart, and I think a lot of traders starting to warm up to the idea of shorting this market again. We have seen a lot of bullish pressure to the upside, slamming into the 0.9250 level before pulling back again. Remember, we had recently formed three weekly candles in a row that were shooting stars at that level, which is a very negative sign indeed. I think at this point we are still in a longer-term distribution pattern, and that means that we will probably eventually drop. I do see short-term support at the 0.89 handle, so a break down below there will freeze the market to go much lower.
Obviously, if we were to break above the 0.9250 level, then it would be a major break out and the New Zealand dollar could go much higher. However, I’m starting to see the New Zealand dollar show signs of weakness again several different currencies, and of course the Canadian dollar is highly correlated to the crude oil markets. The crude oil markets have been trying to build up a bit of momentum to finally break out to the upside, with the West Texas Intermediate grade sitting just below the crucial $55 level. If we do break above there in the WTI Crude Oil market, that should have a lot of people looking to buy the Canadian dollar. Beyond that, on 31 January we will have GDP figures coming out of Canada, which could be a help as well. At this point, I suspect that we are going to finish lower at the end of the month.