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New Zealand dollar is continuing to haemorrhage

Market Analysis

NZDCAD, H4 & Daily

The New Zealand dollar is continuing to haemorrhage, down a further 0.8% today after declining by over 1% yesterday. The clouded outcome of the election has been the cause, which is exacerbating an already worrisome mood among investors. The September ANZ business survey, released today but complied before Saturday’s election, saw confidence drop to a two-year low, with more than a quarter of manufacturing companies expecting business conditions to deteriorate over the next year, well up from just 2% in the previous poll.

NZDCAD logged a low at 0.8932, however is still above its 20-day moving average of 0.8910 through the session, after closing above the indicator for the past six-sessions. The pairing seems to be in a reversal or correction mode been following last Monday’s speech from BoC’s Lane, who appeared to signal a more gradualist approach to rate hikes ahead. Lane said the Bank is paying close attention to the impact of the stronger Canadian dollar and that possible changes to NAFTA are a key source of uncertainty for Canada’s outlook.

The pair, despite last week’s partial recovery up to 0.9080, continues to be in a downtrend almost in all time-frames  from hourly to monthly ones.This might be due to the anticipation of tomorrow’s BOC Governor Poloz speech, while this Thursday we will see the RBNZ’s policy meeting, in which no-change is expected for OCR.

Meanwhile based on the general weakness noticed on NZDCAD, the break of 50-period MA earlier today in the 4-hour chart, triggered our SHORT position at 0.8932 near term Target 1 at 0.8890 and Daily Target 2  at the Daily ATR 0.8840. Resistance set near last week’s highs at 0.9045. The Daily Stochastic has just turned below 80 level, while in the 4-hour chart pair moves in the low Bollinger Bands pattern breaking also the last down fractal.

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Andria Pichidi

Market Analyst

HotForex

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