NZD/CAD dips after 0.9011 peak

Justin Freeman

The New Zealand dollar was one of the forex market’s best performers last week, at least in the first few days.

This was especially true in relation to its pair with the Canadian dollar.

This pair saw a position of 0.9011 at one stage, which was its best performance since back in 2019.

However, the week later spelled problems for the pro-risk Kiwi dollar, which ended up finishing the week down by a fifth of a percentage point.

It then began the week in the gloomier setting of the 0.8800 to 0.8890 price range.

According to analysts, it could go one of two ways.

Price charts suggested that if it was to surge, then it may head to 0.8715, a position it hasn’t seen since the autumn of 2018.

With several events on the economic calendar set to affect the Kiwi dollar, nothing is yet confirmed.

Thursday morning, for example, will see the Reserve Bank of New Zealand release its inflation expectations for Q3 2020.

This was last revealed at 1.24% on a quarter-on-quarter basis.

This is expected to be published at 3am GMT.

However, the main event on the cards is likely to be next week, when the Reserve Bank of New Zealand publishes its interest rate decision during the night in the GMT timezone.

This is due to come out at 2am GMT on Wednesday of next week.

The rate currently sits at 0.25%.

At present, there is no confirmed forecast as to where policymakers at the bank are likely to go next.

The Reserve Bank of New Zealand is known for occasionally causing surprises when it comes to setting policy.

In February of this year, for example, its meeting did not result in a rate change but yet still managed to shift the markets substantially.

The bank unexpectedly shed a form of wording that it had previously used and that suggested that rate cuts in future months could occur – giving the bank a reputation for somewhat dynamic monetary policy setting.

Rate cuts did, of course, occur later as a result of the coronavirus pandemic.

As with many major central banks, they are now hyper-low in an attempt to stimulate the economy.

When this month’s announcement is made, it will be followed by a press conference at 3am GMT.

Even if no rate changes are on the cards, traders of both the NZD/CAD pair and the NZD/USD pair and others are expected to monitor it for either hawkish or dovish signs.

Later that day, there will be a further release from New Zealand.

Food price index data for the month of July will be out at 10:45pm GMT.

Month on month, this was last seen at 0.5%.

There is currently no prediction as to where or how this might move when it is published.

Justin Freeman

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