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NZD/JPY: Short Review & Forecast


Published on: 16/05/2018



The rates continue in the frames of a weak downtrend, a distinctive feature of which is a high volatility, which is typical for currency pairs that include the JPY. Since July 2017 it has been possible to observe a gradual strengthening of the Japanese yen, due to the strong economy of Japan and the demand for safe assets. The New Zealand dollar was weakened due to a weak economic situation and a slight rise in commodity prices.

This month the JPY is under pressure due to a decrease in demand for safe assets and the slowdown of the Japanese economy. In particular, data released today about the country's GDP for the first quarter of 2018 showed a drop of GDP by 0.2%. It should be noted that this is the first decline in the GDP since the fourth quarter of 2015, which is very alarming to investors. Such data indicates a slowing of economic growth in Japan and a decrease in investment and exports, amid fears of investors about the impact of Donald Trump's protectionist policy on the economy in Japan.

The New Zealand dollar unexpectedly received support and was able to consolidate amid the weakening of the Yen. The New Zealand economy, which has shown signs of economic growth, also contributed to this. The NZX New Zealand index reached a price maximum over time. In addition, the manufacturing PMI index rose to 58.9 points in April, reaching the highest level since January 2016. Food inflation increased by 2.3% in April, which is also optimal.

NZDJPY, daily
In the case the upcoming data on the trade balance of New Zealand exceeds market expectations, we can expect a further strengthening of the NZD. In any case, amid the weakening of the yen the NZD has a good chance for growth within the current trend. The oscillators also signal that the rates are in the oversold zone, so the deals to BUY seem the most effective.


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