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NZD/CAD – Long term trends may suggest a reversal

This pair has been ranging in a consistent bound for the past seven or so years. If we have a look at a longer-term timeframe,

NZD/CAD ranging between $0.8 and $0.95 over the past 7 years

We can see that the pair has been ranging between $0.8 and $0.95, with a significant support/resistance area at 0.9. Currently, the price is just under 0.90c, at 0.899.

NZD/CAD - RBNZ comments outweighing vaccine sentiment

New Zealand has rallied on the government's consistent handling of the Coronavirus, and more recently, the RBNZ comments suggesting that negative rates are less likely to be on the table, implying a better than expected in the New Zealand recovery.

However, upbeat sentiment on a Pfizer vaccine before the end of the year has spiked a risk-on rally, especially in the Oil markets. The Canadian Dollar is known for its commodity correlation like the Australian Dollar, in which the CAD strengthens/weakens depending on the price of commodities like Oil. In the past five days, Oil has rallied over 7% on Pfizer vaccine's news. Oil rallying tends to strengthen the Canadian Dollar.

However, the Canadian Dollar has not strengthened against the NZ Dollar, with recent RBNZ's comments further strengthening the NZD. However, as we approach this significant support/resistance area, alongside further positive news on a Coronavirus vaccine before year-end, may end the Bull rally in the New Zealand dollar and heavily reject that 90c resistance level.

NZD/CAD - Canada's Coronavirus situation not helping the Loonie

There is not much news following the Coronavirus situation in Canada. However, the country has experienced a recent Coronavirus spike due to its non-essential lockdown restrictions. The government faces a similar curve to that of the United States and in Europe.

Due to this, top deputy Carolyn Wilkins from the Bank of Canada stated that the country "is likely to exit the pandemic with a lower profile for potential output, leading to a significantly diminished ability to generate goods, services, and incomes on a substantial basis." She also states that "Canada's plan to lift immigration levels will boost potential output growth overtime."