Source: PaxForex Premium Analytics Portal, Fundamental Insight

The New Zealand Trade Balance for February came in at -NZ$714M monthly and at -NZ$15,640M annualized. Forex traders can compare this to the New Zealand Trade Balance for January, reported at -NZ$2,113M monthly and -NZ$15,650M annualized. Exports for February came in at NZ$5.23B, and Imports at NZ$5.95B. Forex traders can compare this to Exports for January, reported at NZ$5.30B, and Imports at NZ$7.42B.

New Zealand Credit Card Spending for February sky-rocketed 25.6% annualized. Forex traders can compare this to New Zealand Credit Card Spending for January, which surged 18.1% annualized.

The Canadian CPI for February is predicted to increase by 0.5% monthly and 5.4% annualized. Forex traders can compare this to the Canadian CPI for January, which rose by 0.5% monthly and 5.9% annualized. The Canadian Core CPI for February is predicted to expand by 0.3 monthly and 4.8% annualized. Forex traders can compare this to the Canadian Core CPI for January, which increased by 0.3 monthly and 5.0% annualized. The Core CPI-Median for February is predicted to expand by 4.8% annualized, and the Core CPI-Trimmed by 4.9% annualized. Forex traders can compare this to the Core CPI-Median for January, which rose by 5.0% annualized, and to the Core CPI-Trimmed by 5.1% annualized.

Inflation remains the primary focus for 2023, but the health of the global banking system complicated central bank action to combat elevated prices. Canadian and New Zealand banks rank relatively safe but could feel the fallout from recent turmoil, especially in bond markets after AT1 bondholders were wiped out in the shotgun wedding and forced marriage between UBS and Credit Suisse. The Canadian Dollar could outperform its New Zealand counterpart on the back of commodity revenues, especially rising precious metal prices led by gold and silver.

The forecast for the NZD/CAD turned bearish after a double resistance level, posed by the upper band of its Ichimoku Kinko Hyo Cloud and its horizontal resistance area, rejected price action. Bearish pressures have increased, but volatility could rise due to a flat Kijun-sen and an ascending Tenkan-sen. The Ichimoku Kinko Hyo Cloud flatlined, and a contraction would increase downside momentum. Traders should also monitor the CCI after it recorded a lower high in extreme overbought territory followed by a breakdown. A move below zero can accelerate the current sell-off. Will bears regain complete control over the NZD/CAD and force price action into its horizontal support area? 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 0.8460 to 0.8520 zone, PaxForex recommends the following trade set-up:

• Timeframe: D1           
• Recommendation: Short Position
• Entry Level: Short Position @ 0.8490
• Take Profit Zone: 0.8335 – 0.8375
• Stop Loss Level: 0.8555

Should price action for the NZD/CAD breakout above 0.8520, PaxForex recommends the following trade set-up:

• Timeframe: D1           
• Recommendation: Long Position
• Entry Level: Long Position @ 0.8555
• Take Profit Zone: 0.8600 – 0.8620
• Stop Loss Level: 0.8520

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