Long NZD/USD and Short USD/CAD – Westpac
Research Team at Westpac, suggests to buy NZD/USD on weakness and to sell USD/CAD on strength.
Key Quotes
“With
all three signals greenlighting an NZD long our signals are even more
emphatically bullish NZD this week vs last week. Recent NZ data has been
stronger than expected (housing market, CPI), weakening arguments for
an April (vs June) OCR cut. The 3.8% rise in the GDT index at this
week's dairy auction, the biggest gains since early Dec 2015, adds to
the more positive narrative. The break above the 0.6965 resistance level
was technically important and encouraging for the near term bullish
case it now needs to hold above that level in the days ahead. We are
long NZD/USD from 0.6850, stop at entry.
Weakness in USD/CAD has
further to go, a potentially higher March CPI next week thanks to
stronger energy prices may well be a catalyst. The backdrop continues to
suit USD/CAD downside, the Fed unlikely to deliver any hawkish
surprises until the data show a convincing recovery from a soft Q1,
while improved growth momentum in China should last a few more months at
least as fiscal and monetary accommodation there continues to feed into
the economy. We are short USD/CAD from 1.2925, stop at 1.3055.”
