TD’s key takeaways on NZD/CAD:
1. Divergence in Terms of Trade: TD highlights a significant divergence in the terms of trade between New Zealand and Canada. Terms of trade measure the value of a country’s exports relative to the value of its imports. A rising terms of trade can be beneficial for a nation’s currency as it indicates that the country can buy more imports for the same amount of exports.
2. Oil Prices and CAD: The Canadian dollar (CAD) stands to gain from the recent surge in oil prices. Given Canada’s status as a major oil exporter, higher oil prices can lead to positive terms of trade shocks for the country, strengthening the CAD.
3. Technical Outlook: TD anticipates that NZD/CAD could move below its year-to-date (YTD) lows of 0.8044. They identify an initial support level at 0.7927 (based on the 23.6% Fibonacci retracement over a 1-year daily window). Moreover, they don’t rule out the possibility that the currency pair might retest last year’s low at 0.767.
This
summary is via the folks at eFX.
For
bank trade ideas, check
out eFX Plus.
For a limited time, get a 7 day free trial, basic for $79 per month
and premium at $109 per month. Get
it here.