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.
“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.”