Poor jobs data turn Canadian dollar bearish
The decline in the price of crude oil enabled the New Zealand dollar to strengthen against the Canadian dollar in the past one week. From a low of 0.9330, the NZD/CAD pair hit a high of 0.9440, before ending the week at 0.9405.
Considering the weak economic data from Canada and the persisting weakness in the price of crude oil, we believe that the NZD/CAD pair will remain in an uptrend for next two weeks at the least. The data from the Statistics Canada indicated that the country lost 31,200 jobs in July. It was far away from the analysts’ expectation of an addition of 10,200 jobs. In July, on m-o-m basis, the unemployment rate in Canada stood almost flat at 6.9%.
The Statistics Canada also reported a widening of the trade deficit to -$3.6 billion in June. The exports increased 0.6% to $41.4 billion in June. Similarly, the imports increased 0.8% to $45 billion in June. The analysts had expected a trade deficit of -2.6 billion in June.
On the other hand, in June 2016, New Zealand reported a trade surplus of $127 million, compared to a trade deficit of $178 million in the prior year. Exports grew 2.6%, while imports declined 4.6% on a y-o-y basis. A 47% rise in the kiwifruit exports contributed to the trade surplus.
The inflation rate remained unchanged at 0.4% in the second-quarter ended June, compared to the prior-quarter (March) of 2016. The 3.3% rise in the housing-related prices contributed mainly to the rise in the consumer prices. This was offset by a 5.3% decline in the transport prices. Expressing confidence about the economy, the Reserve Bank of New Zealand announced that there will not be a need for another rate cut as the modest recovery in the commodity prices have increased the chances of achieving the inflation target of 2%. The current benchmark rate in New Zealand is 2.25%.
Technically, as shown in the chart, the NZD/CAD pair received support from the investors and speculators at 0.9370 levels. The RSI indicates bullishness in the asset with a crossover above the reading of 50. The next resistance for the currency pair is at 0.9520.
So, a Forex trader should purchase the NZD/CAD currency pair near 0.9400, with a stop loss below 0.9300. The profit can be booked when the currency pair comes closer to 0.9520.
A binary trader should look for a one touch call option contract in a suitable binary broker’s platform. Additionally, the trader should also make sure that the contract has a target price of 0.9500 or lower. To increase the chances of ending the contract in profit, an expiry date in the last week of August should be chosen as well.
The surprise outcome of the Brexit referendum enabled even the currencies of fragile economies to strengthen against the Pound. The
Until Wednesday, the EUR/NZD pair was in a downtrend, despite the win of Emmanuel Macron in the French elections. Even