Chart of the Day NZDCAD

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NZDCAD Potential Reversal Zone – Probable Price Path

The market is looking forward to further progress in coronavirus vaccine research. The tug-of-war continues with global risk appetite surging amid the start of US earnings season despite rising Covid-19 cases, especially in Florida. US banks reported a mixed bag of earnings with near record loan loss provisions of almost $ 28b for JPMorgan, Citigroup and Wells Fargo alone. Wells Fargo reported its first quarterly loss since 2008 and cut its dividend, and Citigroup also fell, whereas JPMorgan rose on a record trading revenue. Meanwhile, the Trump administration has rescinded new rules on foreign students studying online after lawsuits filed by Harvard and MIT, but President Trump has signed into law a bill sanctioning Chinese officials who contributed to the erosion of Hong Kong autonomy. The S&P500 index gained 1.35% while the VIX eased to 29.52. UST bonds ended flat with the 10-year bond yield at 0.62%. The 3-month LIBOR edged marginally lower to 0.2709%

NZD: The New Zealand Dollar has regained a bid tone into Wednesday, with the currency trading off the risk on flow. Meanwhile, PM Ardern has warned the country must prepare for a second wave of the coronavirus, in light of developments in other countries around the world. Earlier, the RBNZ purchased NZD390 million in government bonds at its daily operations

CAD: The Canadian Dollar has run into a period of sideways trade, with the currency mostly likely not wanting to make any fresh directional decisions until it sees what comes of today’s anticipated central bank decision. Looking ahead, we get the Bank of Canada policy decision, Canada manufacturing sales, and a batch of US releases including exports, empire state manufacturing, industrial production and the Fed Beige Book.

From a technical and trading perspective, NZDCAD has advanced from the March lows to test upside objective confluence at .8903/35, this area represents the equality objective and the 127.2 extension measured move from Match high to low swing. Profit taking has started and it is reasonable to anticipate a further pull back as such bearish exposure should be rewarded ona  breach of yesterday’s closing level at .8890 initially targeting a move to test the ascending trendline support and monthly pivot sighted at .8700, a closing breach would open a test of projected monthly range support sighted at .8600. A close through .8950 would negate the corrective thesis opening a .9180/9245 test next.

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