NZD/CAD

The NZD/CAD is the currency pair encompassing the New Zealand dollar of New Zealand (symbol $, code NZD), and the Canadian dollar of Canada (symbol $, code CAD).

The pair’s exchange rate indicates how many Canadian dollars are needed in order to purchase one New Zealand dollar.

For example, when the NZD/CAD is trading at 0.8700, it means 1 New Zealand dollar is equivalent to 0.87 Canadian dollars.

The New Zealand dollar (NZD) is the world’s tenth most traded currency, whilst the Canadian dollar (CAD) is the world’s seventh most traded currency.

This results in a cross pair of relatively low liquidity and high spreads, with most forex brokers quoting a spread of between 2 and 6 pips.

The pair’s movement is particularly irregular, despite its fairly low volatility.

How to Trade the NZD/CAD

The NZD/CAD is a minor cross that is linked mostly to commodities movements. In Canada, this entails crude oil prices, which are a central feature to the economy and the CAD.

By extension, the NZD can be characterized as a carry trade currency that is relatively high yielding. Economic metrics in New Zealand also affect the NZD, namely dairy prices and tourism metrics.

New Zealand is currently the world’s largest exporter of whole milk powder. An increase in milk prices will help stimulate the New Zealand economy and the NZD in parallel.

In terms of movements, the NZD/CAD’s range can be extremely erratic, leading many traders reluctant to trade this pair, especially relative to other major crosses.

High volatility in the market can lead to large swings with the NZD/CAD.