Today’s forex trading signal is on the NZD/CAD instrument and we have a buy-stop order for you (see full details below).
New Zealand has swerved to avoid a double-dip recession. GDP was up 1.6% on the fourth quarter. That beat the forecast of 0.5% by economists.
Year on year GDP growth improved dramatically too, coming in at 2.4% compared to 0.9% growth rate that was expected.
As in other economies, the property market is booming and that has helped to flatter the results, bu the all guns blazing stimulus packages from the government have been the main fuel, on both the monetary and fiscal fronts.
NZD/CAD: inflation heating up
Also, as elsewhere, inflationary heat is building in the economy, which led the central bank last month to hint that it might raise rates earlier than previously thought. That’s a sentiment that turns out to be ahead of the curve re. the US Fed, which yesterday said something very similar, bringing forward its next expected rate rise by a year to 2021.
The hot property market in New Zealand has helped to some extent to offset the collapse in the important tourism sector in the wake of the Covid pandemic and closed borders around the world.
Shortly after the report the New Zealand dollar shifted higher, priced at 70.70 against the US dollar, up from 70.60 cents.
According to Bloomberg investors now think there is an 84% chance of a rate rise by May 2022, up from 60% prior to the publication of the GDP report.
Meanwhile in Canada the inflation rate in May climbed to 3.6%, which is the highest reading in a decade.
Commenting on the price inflation, CIBC senior economist Royce Mendes said: “Retailers have had a very tough time, bars and restaurants have had a very tough time over the past year and they’re going to want to make up for some of that lost ground with higher prices.”
Now let’s get to the trading signal.
NZD/CAD forex trading signal: Buy
Instrument: NZD/CAD
Order: BUY STOP
Entry price: 0.8719
Stop Loss: 0.8636
TP1: 0.8803
Recommended Risk: 1%
Risk / Reward Ratio: 1:1
Signal validity period: Good until cancelled
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