Canada is printing its August inflation numbers!
Will today’s release extend NZD/CAD’s downtrend? Or will it start a range and then a reversal?
We’re looking at the 1-hour chart today, yo!
In case you’ve been too busy trading USD-related currency pairs, then you should know that NZD/CAD has been making lower highs and lower lows since earlier this month after the pair got rejected at the .8080 area of interest.
NZD/CAD is now trading closer to .7980 after making new September lows near .7860.
Can NZD/CAD still extend its downtrend?
The Event Guide for Canada’s CPI Report tells us that the leading indicators for Canada’s consumer prices are mixed but the economic calendar is suggesting that we could see higher headline and core annual inflation numbers today.
Higher (read: hawkish) Canadian numbers would mean that the Bank of Canada (BOC) – which paused its rate hikes in its last decision – will have one more reason to go back to its tightening ways.
CAD may see renewed buying demand ON TOP of the support the commodity-related currency is already getting from higher oil prices.
On the other side of the NZD/CAD pair, the People’s Bank of China (PBOC) is expected to keep its 1-year and 5-year loan prime rates steady after cutting the 1-year rate last month. If the PBOC stays on script, then some AUD and NZD bulls may get disappointed enough to sell the comdolls in the short term.
If we see hotter Canadian CPI figures later today, then NZD/CAD may find selling pressure around the .7990 zone near the trend line resistance. As you can see, the trend line is also not far from the 100 and 200 SMAs in the 1-hour time frame.
The pair may head for its previous lows near the .7960 or .7925 previous lows if not new monthly lows.
What do you think? Can NZD/CAD maintain its September downtrend in the next trading sessions?
