Bias: The NZD/CAD is currently bullish-to-range-bound, as it's trading just above the 90-day average and within the upper half of the three-month range.
Key drivers:
• Rate gap: The Reserve Bank of New Zealand has recently cut interest rates significantly, while the Bank of Canada has maintained a tighter stance, giving the NZD a relative advantage.
• Risk/commodities: Oil prices are above their three-month average, suggesting potential support for the CAD, while global market volatility could weigh on risk-sensitive currencies like the NZD.
• Upcoming economic data: The upcoming Canadian employment data could reveal more about the current economic health and influence the CAD’s performance.
Range: The NZD/CAD is likely to drift within its stable three-month range, potentially testing recent highs if the trend persists.
What could change it:
• Upside risk: A surprise improvement in global trade conditions could boost the NZD.
• Downside risk: A significant drop in oil prices could negatively impact the CAD and strengthen the NZD relative to it.