Source: PaxForex Premium Analytics Portal, Fundamental Insight
The New Zealand Performance of Services Index for May came in at 53.3, and the New Zealand Performance of Composite Index at 50.8. Forex traders can compare this to the New Zealand Performance of Services Index for April, reported at 50.1, and the New Zealand Performance of Composite Index at 48.5.
New Zealand RBNZ Offshore Holdings for May stood at 58.7%. Economists predicted a reading of 58.5%. Forex traders can compare this to New Zealand RBNZ Offshore Holdings for April, reported at 57.6%.
The Canadian Industrial Product Price Index for May is predicted to increase by 1.4% monthly and plunge by 5.8% annualized. Forex traders can compare this to the Canadian Industrial Product Price Index for April, which decreased by 0.2% monthly and 3.5% annualized. The Canadian Raw Materials Price Index for May is predicted to rise by 1.7% monthly and collapse by 12.8% annualized. Forex traders can compare this to the Canadian Raw Materials Price Index for April, which rose by 2.9% monthly and plunged by 10.8% annualized.
The New Zealand Dollar is a soft commodity currency, and the Canadian Dollar is a hard commodity currency, making the NZD/CAD an appealing currency pair to trade as commodity prices decrease amid a weakening global economy. Some of the commodities New Zealand exports rank as a higher necessity among consumers than several Canadian commodity exports. Both currencies will feel downside pressure from decreasing costs, priced in US Dollars. The interest rate differential between New Zealand, with rates at 5.50%, the highest among G7 countries, and that of Canada, with rates at 4.75%, is likely to narrow by the end of 2023. It could supply an ongoing bearish flow on the New Zealand Dollar.
The forecast for the NZD/CAD remains bearish after this currency pair plunged below its Ichimoku Kinko Hyo Cloud, which began to descend, adding ongoing downside pressures. Volatility could rise as bulls and bears fight for directional control, and price action trades above its flat Tenkan-sen but below its flat Kijun-sen. Traders should also monitor the CCI following its breakdown from extreme overbought territory. Should this technical indicator move below zero, price action will face more selling pressure. Can bears overpower bulls and regain control over the NZD/CAD to guide price action into its horizontal support area and a fresh 2023 low? Subscribe to the PaxForex Daily Fundamental Analysis and earn over 5,000 pips per month.
Should price action for the NZD/CAD remain inside the or breakdown below the 0.8175 to 0.8225 zone, PaxForex recommends the following trade set-up:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Short Position @ 0.8205
- Take Profit Zone: 0.7990 – 0.8050
- Stop Loss Level: 0.8295
Should price action for the NZD/CAD breakout above 0.8225, PaxForex recommends the following trade set-up:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Long Position @ 0.8295
- Take Profit Zone: 0.8365 – 0.8435
- Stop Loss Level: 0.8225
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