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NZD/JPY – Right to Resistance?
Tomorrow is central bank day and NZD/JPY could be in for quite a ride as the one two punch of Fed and RBNZ hits the market late Wednesday afternoon. Although the market isn’t expecting any changes in policy the tone of the statement could move both USD/JPY and NZD/USD and create some massive volatility in the pair.
Both central banks are faced with the choice of what they will do in December. The Fed has been priming the market for a rate hike for nearly six months but the slowdown in global growth has forced US policymakers to take their finger off the trigger and given the tepid recent data and lack of any inflationary pressures the FOMC may decide to hold off til next year.
RBNZ on the other hand may be under pressure to cut. Dairy auction prices have declined for the first time in four months and yesterday’s Trade Balance deficit was wider than expected suggesting that exports remain under pressure.
All of this indicates that NZD/JPY may have topped out at it 81.00 level and may be on the way back to testing swing lows at 72.00