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NZD/JPY – Gunning for 90?
NZD/JPY rose to a fresh 6-year high on Friday and we think the move could continue in the coming week. While there aren’t any major economic reports scheduled for release from New Zealand, there are many pieces of data that could affect how NZD/JPY trades. There has been widespread speculation that the Chinese government could increase stimulus in response to weaker Chinese data. If China’s PMI reports surprise to the downside, this speculation could gain momentum, providing additional support to the New Zealand dollar. At the same time, we have an exceptionally busy week for the JPY with Japan poised to raise the sales tax for the first time in 17 years. US non-farm payrolls are also scheduled for release and this report along with the leading indicators for payrolls will affect the market’s demand for USD/JPY, having direct impact on NZD/JPY. Since we are looking for payroll growth to accelerate, it is yet another reason why we believe NZD/JPY will test and break 90 in the coming week.
We have to turn to the monthly chart of NZD/JPY to find resistance. There is no major resistance until the psychologically significant 90 level and above that the 2007 high of 97.77. The daily charts show the closest level of support at 86.35.