Two central bank meetings this week could steer NZD/USD, USD/CAD
The Reserve Bank of New Zealand (RBNZ) and Bank of Canada (BoC) both set rates on Wednesday this week.
RBNZ rate decision
The couple of central banks will have their interest rate meetings this week, both on Wednesday the 13th of July.
First up is the Reserve Bank of New Zealand (RBNZ) which is expected to raise rates by 50 basis points (bps) to 2.5% back to levels not seen since 2016.
The RBNZ was among the first of the central banks to start raising rates up to October last year - the bank's official cash rate was at 0.25% This expected rate hike this week will be the sixth in a row.
A quick update on where we are in terms of the New Zealand dollar. This is the New Zealand dollar against the US dollar. It's very similar against the Australian dollar. So you'll be trading this the same sort of way.
If you think that there's going to be a more aggressive attitude from the New Zealand central bank then obviously you'd want to see it break this line of support at 6124. If it's a little bit less hawkish in its rhetoric, maybe we might see this line of support at 6124 being held up.
BoC on rates
Then later on the day, on Wednesday at 15:00 UK time to be precise, the Bank of Canada (BoC) will issue its interest rate decision.
Now it began its hiking process a little bit later, but ranks as one of the highest rates in the world's main economies. Economists see a rate increase of 75 basis points this week from the BoC, which would take the bank's overnight rate to two-and-a-quarter per cent.
Up to January this year the Bank of Canada's rate was at 0.25%, so we've seen 200 basis points in six months, which has been the way in which the Canadian central bank has chosen to move with interest rates.
Let's take a quick look at what's happened to the USD/CAD.
We've seen this sort of triple top pattern forming here, capping out at 13078. In today's session we've got the US dollar rising against the Canadian dollar, but the same for the RBNZ - if you've got an aggressive hawkish Canadian central bank, could we see this line at 13078 defended and further downside to go.
We'll have to see what happens with those two interest rate decisions on Wednesday this week.
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