The NZDCAD trend play initiated a fortnight ago from .8553 has now hits its final target at .8351. Weakness in NZD linked to the return of a nationwide lockdown there, as well as strength in CAD linked to higher oil prices and BOC hawkishness, has worked wonderfully for this trade. While the final target for this trade has been hit, those looking to remain short can simply use the levels now. While price holds beneath the last broken support at .8475, the market is likely to extend further to test the channel low around the .8242 level. The retail market remains heavily long, in favour of further downside. However, if holding shorts, make sure to monitor momentum indicators for any bullish divergence.Keep An Eye OnRisk flows over the week are likely to be key. We are seeing some rebound so far today linked to the bounce in equities. However, given the volatile situation between Russia and Ukraine as well as the US labour reports at the top of the weeks, risk markets are vulnerable to further downside on any worrying news reports and any strong data on Friday. Such conditions should likely benefit CAD over NZD near term.
Source: Tickmill
