The Canadian dollar remains the best performing currency against the greenback on Thursday following the four-day rally, while the New Zealand extended the decline from earlier this week and continued to underperform amongst the major currencies.
The Canadian dollar remains the best performing currency against the greenback on Thursday following the four-day rally, but the overnight advance appears to have tapered off in the North American trade as the U.S. dollar rallies across the board. The USD/CAD slipped to a low of 1.0271 during the overnight trade, and remains 12pips lower during the North American trade after moving only 61% of its average true range, with the pair filling the gap from the 120-SMA at 1.0340. However, the lack of momentum to break above the 120-SMA could lead the pair to hold steady ahead of Friday’s Non-Farm Payrolls report as employment in the world’s largest economy is expected to contract 63K in February. Nevertheless, as the Bank of Canada holds an improved outlook for the world’s eighth largest economy and see price pressures intensifying at a faster pace than initial expected, the central bank may see scope to hike rates later this year as the recovery gathers momentum.
The New Zealand extended the decline from earlier this week and continued to underperform amongst the major currencies, with the exchange rate slipping to a fresh weekly low of 0.6869. The NZD/USD remains 70pips lower on the day after moving 105% of its daily ATR, and we may see the pair continue to trend lower going into the Asian trade as investors scale back their appetite for risk. However, as the kiwi-dollar maintains the broad range carried over from the previous month, we may see the exchange rate cover the gap from the 120-SMA (0.6940) before we get another move to the downside as the 30-minute RSI bounces back from a low of 35. Nevertheless, as the NZD/USD maintains the downward trending triangle formation from the January (0.7444) suggests we are likely to see lower exchange rates as price action approaches the apex.
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To discuss this report contact David Song, Currency Analyst: dsong@fxcm.com
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