Looking at the daily charts of the Nzd/crosses I noticed the New Zealand dollar trading at the tops. Nothing special until here. In the same time, I remembered that RBNZ's governor, Mr Wheeler, earlier this year, admitted that the central bank of New Zealand stepped in the FX market to stop the kiwi's strength as it was damaging the exporters and indirectly the economy. When Mr. Wheeler said that the Nzd/Usd was trading in the 0.8670 area and all the nzd/crosses were at record highs. That was happening in April 2013, in a moment that the world were in a "currency war" and everyone was fighting to devalue their own currency with the Japan as a leader of the currency devaluation. One weapon to do that was the official rate cuts and RBNZ did used this weapon bringing the official rate to the record lows at 2.5%. But this weapon had a secondary effect: the inflation got crazy driven mostly by the house prices so if Mr. Wheeler do not want to create a housing bubble he can not afford to cut the rates anymore and has to find some other solutions in a way to keep the house prices under control but in the same time to limit the NZD strength.
In an opinion piece in New Zealand Herald, on October 3rd, Mr. Wheeler said: "The Reserve Bank of New Zealand would raise rates more aggressively than forecast if mortgage lending limits introduced this week fail to cool the housing market." And this mixed with the US debt ceiling issue and the international context dragged the kiwi's strength for the last 2 weeks. For the moment seems that Mr Wheeler found some "medicine" for the housing problem but he now has to think about the "medicine" for the NZD strength as I am sure he is thinking at the same thing I am:
On the daily chart of the nzd/cad I also see a small bearish divergence with the MACD (and also with the RSI - which is not represented on my chart) and mostly the nzd/cad is trading only 40 pips away from the April's top. I entered a short nzd/cad at 0.8735 with my SL above the April's top ( 0.8780) at 0.8850. I do expect the RBNZ to intervene and drag this pair back to 0.8475 area where my TP will be.