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Nzd-jpy

NZDJPY facing bearish pressure, drop incoming!Price is facing bearish pressure as it holds under the descending trendline resistance and 1st resistance at 77.330 in line with 38.2% Fibonacci retracement and 23.6% Fibonacci extension. Price may bearish from 1st resistance at 77.330 in line with 38.2% Fibonacci retracement and 23.6% Fibonacci extension towards the 1st support at 75.990 in line with 61.8% Fibonacci retracement and 76.4% Fibonacci extension . Our bearish view is further supported by price holding below the EMA and MACD is shown to be holding below the 0 line. Otherwise price may continue to bullish towards 2nd resistance at 77.894 in line with 61.8% Fibonacci retracement and 38.2% Fibonacci extension . Trading CFDs on margin carries high risk. Losses can exceed the initial investment so please ensure you fully understand the risks.
Short
by TradeGATEHub
NZD JPY - FUNDAMENTAL DRIVERSNZD FUNDAMENTAL BIAS: BULLISH 1. Developments surrounding the global risk outlook. As a high-beta currency, NZD has benefited from the market's improving risk outlook over recent months as participants moved out of safehavens and into riskier, higher-yielding assets. As a pro-cyclical currency, the NZD enjoyed upside alongside other cyclical assets going into what majority of market participants think was an early post-recession recovery phase. As long as expectations for the global economy remains positive the overall positive outlook for risk sentiment should be supportive for the NZD in the med-term , but the recent short-term jitters and risk off flows once again showed us why risk sentiment is also a very important short-term driver for the currency. 2. The Monetary Policy outlook for the RBNZ New Zealand’s Zero Covid strategy caused quite the rigmarole for the NZD this week as market participants were forced to unwind some of their very aggressive expectations for rate hikes going into the meeting. The unwind was so aggressive that OIS prices dropped from a 100% chance of a hike to just above 50% at some stage. The RBNZ chose to leave rates unchanged, but despite the virus escalation they offered a much more optimistic tone compared to their prior meeting by updating their rate path projections to show 7 projected hikes between Dec 2021 and H1 2023 (bringing the OCR to 2.0%). This was even more aggressive than the already aggressive bets heading into the meeting before the covid news hit the wires. The Governor also later explained that they need to continue to move on policy and cannot wait for uncertainty as they have a lot of work to do to get back to the neutral rate of 2.0%. Also, when asked about Oct Governor Orr said the meeting is live, but also acknowledged that they’ve made it very clear their next move is likely a hike so they can afford to wait. Thus, with the upgraded rate path the med-term bullish outlook remains intact for the NZD. Last week we saw very hawkish comments from RBNZ’s Hawkesby who stated that the bank’s decision not to hike rates last week was mostly to do with optics and not due to perceived risks, and also explained that the bank contemplated hiking rates by 50 basis points, confirming the bank’s hawkish tone and placing the RBNZ once again miles ahead of any other major central banks in terms of policy normalization and tightening. 3. The country’s economic and health developments The main focus right now will be on how quickly the New Zealand government can get the virus situation under control. We’ve already heard some good news that the government has been able to trace the source of the recent outbreak and should be able to get the situation under control. This will be a key factor to watch in the next few sessions. After solid Q2 GDP data we saw yields push higher at the front-end, which could see markets price in a possible hike in rates as early as the October meeting, so keeping track of the short end this week. 4. CFTC Analysis Latest CFTC data (updated until 14 Sep) showed a positioning change of +2343 with a net non-commercial position of +6206. With the overall optimistic rate path from the RBNZ, the bias for the currency remains unchanged, and with a small net-long positioning the current spot levels for the NZD still looks attractive for med-term buyers, but short-term moves do still look a bit overdone at current levels. JPY FUNDAMENTAL BIAS: BEARISH 1. Safe-haven status and overall risk outlook As a safe-haven currency, the market's risk outlook is the primary driver of JPY. Economic data rarely proves market moving; and although monetary policy expectations can prove highly market-moving in the short-term, safe-haven flows are typically the more dominant factor. The market's overall risk tone has improved considerably following the pandemic with good news about successful vaccinations, and ongoing monetary and fiscal policy support paved the way for markets to expect a robust global economic recovery. Of course, there remains many uncertainties and many countries are continuing to fight virus waves, but as a whole the outlook has kept on improving over the past couple of months, which would expect safe-haven demand to diminish and result in a bearish outlook for the JPY. 2. Low-yielding currency with inverse correlation to US10Y As a low yielding currency, the JPY usually shares an inverse correlation to strong moves in yield differentials, more specifically in strong moves in US10Y . However, like most correlations, the strength of the inverse correlation between the JPY and US10Y is not perfect and will ebb and flow depending on the type of market environment from a risk and cycle point of view. The rangebound price action in US10Y from July has meant our conviction in JPY shorts has reduced versus the US Dollar , and until US10Y can convincingly break higher and take out its recent range highs we will stay more patient with USDJPY longs. 3. CFTC Analysis Latest CFTC data (updated until 14 Sep) showed a positioning change of +2030 with a net non-commercial position of -60295. With positioning still, the largest net-short among the majors we want to be careful of the risks going into September which is historically the worse performing month for equities. That alone doesn’t mean we are expecting equities to push lower but given the frothy price action over recent weeks (haven’t seen a 5% correction in the S&P500 in 11 months) as well as seasonality and the growing chorus of participants calling for a bigger correction, we don’t want to ignore the possibility of some increased volatility this month. That doesn’t mean we start buying the JPY of course, it just means that if we do see some jitters creeping in for risk assets it is expected to be positive for the JPY, and with the biggest net-short for the majors there is a lot of downside in the JPY that can be unwound in such a scenario.
by thunderpips
NZD JPY - FUNDAMENTAL DRIVERSNZD FUNDAMENTAL BIAS: BULLISH 1. Developments surrounding the global risk outlook. As a high-beta currency, NZD has benefited from the market's improving risk outlook over recent months as participants moved out of safehavens and into riskier, higher-yielding assets. As a pro-cyclical currency, the NZD enjoyed upside alongside other cyclical assets going into what majority of market participants think was an early post-recession recovery phase. As long as expectations for the global economy remains positive the overall positive outlook for risk sentiment should be supportive for the NZD in the med-term , but the recent short-term jitters and risk off flows once again showed us why risk sentiment is also a very important short-term driver for the currency. 2. The Monetary Policy outlook for the RBNZ New Zealand’s Zero Covid strategy caused quite the rigmarole for the NZD this week as market participants were forced to unwind some of their very aggressive expectations for rate hikes going into the meeting. The unwind was so aggressive that OIS prices dropped from a 100% chance of a hike to just above 50% at some stage. The RBNZ chose to leave rates unchanged, but despite the virus escalation they offered a much more optimistic tone compared to their prior meeting by updating their rate path projections to show 7 projected hikes between Dec 2021 and H1 2023 (bringing the OCR to 2.0%). This was even more aggressive than the already aggressive bets heading into the meeting before the covid news hit the wires. The Governor also later explained that they need to continue to move on policy and cannot wait for uncertainty as they have a lot of work to do to get back to the neutral rate of 2.0%. Also, when asked about Oct Governor Orr said the meeting is live, but also acknowledged that they’ve made it very clear their next move is likely a hike so they can afford to wait. Thus, with the upgraded rate path the med-term bullish outlook remains intact for the NZD. Last week we saw very hawkish comments from RBNZ’s Hawkesby who stated that the bank’s decision not to hike rates last week was mostly to do with optics and not due to perceived risks, and also explained that the bank contemplated hiking rates by 50 basis points, confirming the bank’s hawkish tone and placing the RBNZ once again miles ahead of any other major central banks in terms of policy normalization and tightening. 3. The country’s economic and health developments The main focus right now will be on how quickly the New Zealand government can get the virus situation under control. We’ve already heard some good news that the government has been able to trace the source of the recent outbreak and should be able to get the situation under control. This will be a key factor to watch in the next few sessions. After solid Q2 GDP data we saw yields push higher at the front-end, which could see markets price in a possible hike in rates as early as the October meeting, so keeping track of the short end this week. 4. CFTC Analysis Latest CFTC data (updated until 14 Sep) showed a positioning change of +2343 with a net non-commercial position of +6206. With the overall optimistic rate path from the RBNZ, the bias for the currency remains unchanged, and with a small net-long positioning the current spot levels for the NZD still looks attractive for med-term buyers, but short-term moves do still look a bit overdone at current levels. JPY FUNDAMENTAL BIAS: BEARISH 1. Safe-haven status and overall risk outlook As a safe-haven currency, the market's risk outlook is the primary driver of JPY. Economic data rarely proves market moving; and although monetary policy expectations can prove highly market-moving in the short-term, safe-haven flows are typically the more dominant factor. The market's overall risk tone has improved considerably following the pandemic with good news about successful vaccinations, and ongoing monetary and fiscal policy support paved the way for markets to expect a robust global economic recovery. Of course, there remains many uncertainties and many countries are continuing to fight virus waves, but as a whole the outlook has kept on improving over the past couple of months, which would expect safe-haven demand to diminish and result in a bearish outlook for the JPY. 2. Low-yielding currency with inverse correlation to US10Y As a low yielding currency, the JPY usually shares an inverse correlation to strong moves in yield differentials, more specifically in strong moves in US10Y . However, like most correlations, the strength of the inverse correlation between the JPY and US10Y is not perfect and will ebb and flow depending on the type of market environment from a risk and cycle point of view. The rangebound price action in US10Y from July has meant our conviction in JPY shorts has reduced versus the US Dollar , and until US10Y can convincingly break higher and take out its recent range highs we will stay more patient with USDJPY longs. 3. CFTC Analysis Latest CFTC data (updated until 14 Sep) showed a positioning change of +2030 with a net non-commercial position of -60295. With positioning still, the largest net-short among the majors we want to be careful of the risks going into September which is historically the worse performing month for equities. That alone doesn’t mean we are expecting equities to push lower but given the frothy price action over recent weeks (haven’t seen a 5% correction in the S&P500 in 11 months) as well as seasonality and the growing chorus of participants calling for a bigger correction, we don’t want to ignore the possibility of some increased volatility this month. That doesn’t mean we start buying the JPY of course, it just means that if we do see some jitters creeping in for risk assets it is expected to be positive for the JPY, and with the biggest net-short for the majors there is a lot of downside in the JPY that can be unwound in such a scenario.
by thunderpips
5
NZD JPY - FUNDAMENTAL DRIVERSNZD FUNDAMENTAL BIAS: BULLISH 1. Developments surrounding the global risk outlook. As a high-beta currency, NZD has benefited from the market's improving risk outlook over recent months as participants moved out of safehavens and into riskier, higher-yielding assets. As a pro-cyclical currency, the NZD enjoyed upside alongside other cyclical assets going into what majority of market participants think was an early post-recession recovery phase. As long as expectations for the global economy remains positive the overall positive outlook for risk sentiment should be supportive for the NZD in the med-term, but the recent short-term jitters and risk off flows once again showed us why risk sentiment is also a very important short-term driver for the currency. 2. The Monetary Policy outlook for the RBNZ New Zealand’s Zero Covid strategy caused quite the rigmarole for the NZD this week as market participants were forced to unwind some of their very aggressive expectations for rate hikes going into the meeting. The unwind was so aggressive that OIS prices dropped from a 100% chance of a hike to just above 50% at some stage. The RBNZ chose to leave rates unchanged, but despite the virus escalation they offered a much more optimistic tone compared to their prior meeting by updating their rate path projections to show 7 projected hikes between Dec 2021 and H1 2023 (bringing the OCR to 2.0%). This was even more aggressive than the already aggressive bets heading into the meeting before the covid news hit the wires. The Governor also later explained that they need to continue to move on policy and cannot wait for uncertainty as they have a lot of work to do to get back to the neutral rate of 2.0%. Also, when asked about Oct Governor Orr said the meeting is live, but also acknowledged that they’ve made it very clear their next move is likely a hike so they can afford to wait. Thus, with the upgraded rate path the med-term bullish outlook remains intact for the NZD. Last week we saw very hawkish comments from RBNZ’s Hawkesby who stated that the bank’s decision not to hike rates last week was mostly to do with optics and not due to perceived risks, and also explained that the bank contemplated hiking rates by 50 basis points, confirming the bank’s hawkish tone and placing the RBNZ once again miles ahead of any other major central banks in terms of policy normalization and tightening. 3. The country’s economic and health developments The main focus right now will be on how quickly the New Zealand government can get the virus situation under control. We’ve already heard some good news that the government has been able to trace the source of the recent outbreak and should be able to get the situation under control. This will be a key factor to watch in the next few sessions. After solid Q2 GDP data we saw yields push higher at the front-end, which could see markets price in a possible hike in rates as early as the October meeting, so keeping track of the short end this week. 4. CFTC Analysis Latest CFTC data (updated until 14 Sep) showed a positioning change of +2343 with a net non-commercial position of +6206. With the overall optimistic rate path from the RBNZ, the bias for the currency remains unchanged, and with a small net-long positioning the current spot levels for the NZD still looks attractive for med-term buyers, but short-term moves do still look a bit overdone at current levels. JPY FUNDAMENTAL BIAS: BEARISH 1. Safe-haven status and overall risk outlook As a safe-haven currency, the market's risk outlook is the primary driver of JPY. Economic data rarely proves market moving; and although monetary policy expectations can prove highly market-moving in the short-term, safe-haven flows are typically the more dominant factor. The market's overall risk tone has improved considerably following the pandemic with good news about successful vaccinations, and ongoing monetary and fiscal policy support paved the way for markets to expect a robust global economic recovery. Of course, there remains many uncertainties and many countries are continuing to fight virus waves, but as a whole the outlook has kept on improving over the past couple of months, which would expect safe-haven demand to diminish and result in a bearish outlook for the JPY. 2. Low-yielding currency with inverse correlation to US10Y As a low yielding currency, the JPY usually shares an inverse correlation to strong moves in yield differentials, more specifically in strong moves in US10Y . However, like most correlations, the strength of the inverse correlation between the JPY and US10Y is not perfect and will ebb and flow depending on the type of market environment from a risk and cycle point of view. The rangebound price action in US10Y from July has meant our conviction in JPY shorts has reduced versus the US Dollar , and until US10Y can convincingly break higher and take out its recent range highs we will stay more patient with USDJPY longs. 3. CFTC Analysis Latest CFTC data (updated until 14 Sep) showed a positioning change of +2030 with a net non-commercial position of -60295. With positioning still, the largest net-short among the majors we want to be careful of the risks going into September which is historically the worse performing month for equities. That alone doesn’t mean we are expecting equities to push lower but given the frothy price action over recent weeks (haven’t seen a 5% correction in the S&P500 in 11 months) as well as seasonality and the growing chorus of participants calling for a bigger correction, we don’t want to ignore the possibility of some increased volatility this month. That doesn’t mean we start buying the JPY of course, it just means that if we do see some jitters creeping in for risk assets it is expected to be positive for the JPY, and with the biggest net-short for the majors there is a lot of downside in the JPY that can be unwound in such a scenario.
by thunderpips
1
NZDJPY has hit a pivot, potentialbearish momentum | 15 Sept 2021NZDUSD is reacting below our pivot level at 77.792 which is in line with 23.6% Fibonacci extension level. Price could potentially swing towards support at 76.569 which coincides with 50% Fibonacci retracement level and 61.8% Fibonacci extension level. Price is trascending within the Ichimoku clouds which forecasts downward momentum and together with MacD , which is on a downward trend, further supports our bearish bias. Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this website are provided on an "as-is" basis, as general market commentary, and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is therefore not subject to any prohibition on dealing ahead of dissemination. Although this commentary is not produced by an independent source, FXCM takes all sufficient steps to eliminate or prevent any conflicts of interest arising out of the production and dissemination of this communication. The employees of FXCM commit to acting in the clients' best interests and represent their views without misleading, deceiving, or otherwise impairing the clients' ability to make informed investment decisions. For more information about the FXCM's internal organizational and administrative arrangements for the prevention of conflicts, please refer to the Firms' Managing Conflicts Policy. Please ensure that you read and understand our Full Disclaimer and Liability provision concerning the foregoing Information, which can be accessed on the website.
Short
by FXCM
3
NZDJPY 380PIP SHORT! UPDATEHello traders, here we have ourselves a beautiful NZDJPY setup. This setup has a ultimate goal of 380 pips profit! With a small 25 pip stop loss! This insane profit margin gives us a record Risk:Reward of 15.2! This is phenomenal as the risk compared to the reward is so minimal and would a be a lovely trade to catch. This pair is currently forming a double top formation, however I can also see a reversal pattern forming which should reverse this week. I am currently expecting NZD Weakness and JPY Strength which will create this correction. We are currently in a bullish impulse which should correct shortly and reach our TP.
Short
by Pips-Collector
NZDJPY is experiencing Bearish PressurePrice has recently broken out of the upward trend momentum and moving sideways, signalling a start of a downward trend. We can expect price to push up from pivot level (in line with 23.6% Fibonacci retracement ) towards our area of take profit level in line with 88% Fibonacci retracement level and graphical price support of 77.593. Our bearish bias is further supported by the price holding below the 78.208EMA, MacD indicating continuation of trend. Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this website are provided on an "as-is" basis, as general market commentary, and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is therefore not subject to any prohibition on dealing ahead of dissemination. Although this commentary is not produced by an independent source, FXCM takes all sufficient steps to eliminate or prevent any conflicts of interest arising out of the production and dissemination of this communication. The employees of FXCM commit to acting in the clients' best interests and represent their views without misleading, deceiving, or otherwise impairing the clients' ability to make informed investment decisions. For more information about the FXCM's internal organizational and administrative arrangements for the prevention of conflicts, please refer to the Firms' Managing Conflicts Policy. Please ensure that you read and understand our Full Disclaimer and Liability provision concerning the foregoing Information, which can be accessed on the website.
Short
by FXCM
3
NZD JPY - FUNDAMENTAL DRIVERSNZD FUNDAMENTAL BIAS: BULLISH 1. Developments surrounding the global risk outlook. As a high-beta currency, NZD has benefited from the market's improving risk outlook over recent months as participants moved out of safehavens and into riskier, higher-yielding assets. As a pro-cyclical currency, the NZD enjoyed upside alongside other cyclical assets going into what majority of market participants think was an early post-recession recovery phase. As long as expectations for the global economy remains positive the overall positive outlook for risk sentiment should be supportive for the NZD in the med-term, but the recent short-term jitters and risk off flows once again showed us why risk sentiment is also a very important short-term driver for the currency. 2. The Monetary Policy outlook for the RBNZ New Zealand’s Zero Covid strategy caused quite the rigmarole for the NZD this week as market participants were forced to unwind some of their very aggressive expectations for rate hikes going into the meeting. The unwind was so aggressive that OIS prices dropped from a 100% chance of a hike to just above 50% at some stage. The RBNZ chose to leave rates unchanged, but despite the virus escalation they offered a much more optimistic tone compared to their prior meeting by updating their rate path projections to show 7 projected hikes between Dec 2021 and H1 2023 (bringing the OCR to 2.0%). This was even more aggressive than the already aggressive bets heading into the meeting before the covid news hit the wires. The Governor also later explained that they need to continue to move on policy and cannot wait for uncertainty as they have a lot of work to do to get back to the neutral rate of 2.0%. Also, when asked about Oct Governor Orr said the meeting is live, but also acknowledged that they’ve made it very clear their next move is likely a hike so they can afford to wait. Thus, with the upgraded rate path the med-term bullish outlook remains intact for the NZD. Last week we saw very hawkish comments from RBNZ’s Hawkesby who stated that the bank’s decision not to hike rates last week was mostly to do with optics and not due to perceived risks, and also explained that the bank contemplated hiking rates by 50 basis points, confirming the bank’s hawkish tone and placing the RBNZ once again miles ahead of any other major central banks in terms of policy normalization and tightening. 3. The country’s economic and health developments The main focus right now will be on how quickly the New Zealand government can get the virus situation under control. We’ve already heard some good news that the government has been able to trace the source of the recent outbreak and should be able to get the situation under control. This will be a key factor to watch for the NZD in the next few sessions. 4. CFTC Analysis Latest CFTC data for the NZD (updated until 31 August) showed a positioning change of -1779 with a net non-commercial position of -2141. With the overall optimistic rate path from the RBNZ, the bias for the currency remains unchanged, and with positioning in net-short territory the current spot levels for the NZD still looks attractive for med-term buyers. JPY FUNDAMENTAL BIAS: BEARISH 1. Safe-haven status and overall risk outlook As a safe-haven currency, the market's risk outlook is the primary driver of JPY. Economic data rarely proves market moving; and although monetary policy expectations can prove highly market-moving in the short-term, safe-haven flows are typically the more dominant factor. The market's overall risk tone has improved considerably following the pandemic with good news about successful vaccinations, and ongoing monetary and fiscal policy support paved the way for markets to expect a robust global economic recovery. Of course, there remains many uncertainties and many countries are continuing to fight virus waves, but as a whole the outlook has kept on improving over the past couple of months, which would expect safe-haven demand to diminish and result in a bearish outlook for the JPY. 2. Low-yielding currency with inverse correlation to US10Y As a low yielding currency, the JPY usually shares an inverse correlation to strong moves in yield differentials, more specifically in strong moves in US10Y . However, like most correlations, the strength of the inverse correlation between the JPY and US10Y is not perfect and will ebb and flow depending on the type of market environment from a risk and cycle point of view. The rangebound price action in US10Y from July has meant our conviction in JPY shorts has reduced versus the US Dollar , and until US10Y can convincingly break higher and take out it’s recent range highs we will stay more patient with USDJPY longs. 3. CFTC Analysis Latest CFTC data for the JPY (updated until 31 August) showed a positioning change of +3541 with a net non-commercial position of -63130. With positioning still the largest net-short among the majors we want to be careful of the risks going into September which is historically the worse performing month for equities. That alone doesn’t mean we are expecting equities to push lower but given the frothy price action over recent weeks (haven’t seen a 5% correction in the S&P500 in 11 months) as well as seasonality and the growing chorus of participants calling for a bigger correction, we don’t want to ignore the possibility of some increased volatility this month. That doesn’t mean we start buying the JPY of course, it just means that if we do see some jitters creeping in for risk assets it is expected to be positive for the JPY, and with the biggest net-short for the majors there is a lot of downside in the JPY that can be unwound in such a scenario.
by thunderpips
1
NZDJPY continuation of bullish momentum | 2nd Sep 2021Price broke out of the descending trendline resistance and price is expected to push to the take profit level at 127.2% Fibonacci retracement and 161.8% Fibnonacci extension. Our bullish bias is further supported by the price holding above the Ichimoku cloud and the 50 period MA. Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this website are provided on an "as-is" basis, as general market commentary, and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is therefore not subject to any prohibition on dealing ahead of dissemination. Although this commentary is not produced by an independent source, FXCM takes all sufficient steps to eliminate or prevent any conflicts of interest arising out of the production and dissemination of this communication. The employees of FXCM commit to acting in the clients' best interests and represent their views without misleading, deceiving, or otherwise impairing the clients' ability to make informed investment decisions. For more information about the FXCM's internal organizational and administrative arrangements for the prevention of conflicts, please refer to the Firms' Managing Conflicts Policy. Please ensure that you read and understand our Full Disclaimer and Liability provision concerning the foregoing Information, which can be accessed on the website.
Long
by FXCM
NZDJPY continuation of bullish momentum | 31st Aug 2021Price is holding above the 21 EMA showing a significant bullish continuation. Price is expected to move upwards from the pivot level in line with the 78.6% Fibonacci extension and 61.8% Fibonacci retracement to the take profit level which is in line with the 127.2% Fibonacci extension . Our bullish bias is further supported by the Ichimoku cloud where price is seen to be holding above it showing a bullish momentum. Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this website are provided on an "as-is" basis, as general market commentary, and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is therefore not subject to any prohibition on dealing ahead of dissemination. Although this commentary is not produced by an independent source, FXCM takes all sufficient steps to eliminate or prevent any conflicts of interest arising out of the production and dissemination of this communication. The employees of FXCM commit to acting in the clients' best interests and represent their views without misleading, deceiving, or otherwise impairing the clients' ability to make informed investment decisions. For more information about the FXCM's internal organizational and administrative arrangements for the prevention of conflicts, please refer to the Firms' Managing Conflicts Policy. Please ensure that you read and understand our Full Disclaimer and Liability provision concerning the foregoing Information, which can be accessed on the website.
Long
by FXCM
NZD JPY - FUNDAMENTAL DRIVERSNZD FUNDAMENTAL BIAS: BULLISH 1. Developments surrounding the global risk outlook. As a high-beta currency, NZD has benefited from the market's improving risk outlook over recent months as participants moved out of safehavens and into riskier, higher-yielding assets. As a pro-cyclical currency, the NZD enjoyed upside alongside other cyclical assets going into what majority of market participants think was an early post-recession recovery phase. As long as expectations for the global economy remains positive the overall positive outlook for risk sentiment should be supportive for the NZD in the med-term , but the recent short-term jitters and risk off flows once again showed us why risk sentiment is also a very important short-term driver for the currency. 2. The Monetary Policy outlook for the RBNZ New Zealand’s Zero Covid strategy caused quite the rigmarole for the NZD this week as market participants were forced to unwind some of their very aggressive expectations for rate hikes going into the meeting. The unwind was so aggressive that OIS prices dropped from a 100% chance of a hike to just above 50% at some stage. The RBNZ chose to leave rates unchanged, but despite the virus escalation they offered a much more optimistic tone compared to their prior meeting by updating their rate path projections to show 7 projected hikes between Dec 2021 and H1 2023 (bringing the OCR to 2.0%). This was even more aggressive than the already aggressive bets heading into the meeting before the covid news hit the wires. The Governor also later explained that they need to continue to move on policy and cannot wait for uncertainty as they have a lot of work to do to get back to the neutral rate of 2.0%. Also, when asked about Oct Governor Orr said the meeting is live, but also acknowledged that they’ve made it very clear their next move is likely a hike so they can afford to wait. Thus, with the upgraded rate path the med-term bullish outlook remains intact for the NZD. Last week we saw very hawkish comments from RBNZ’s Hawkesby who stated that the bank’s decision not to hike rates last week was mostly to do with optics and not due to perceived risks, and also explained that the bank contemplated hiking rates by 50 basis points, confirming the bank’s hawkish tone and placing the RBNZ once again miles ahead of any other major central banks in terms of policy normalization and tightening. 3. The country’s economic and health developments The main focus right now will be on how quickly the New Zealand government can get the virus situation under control. We’ve already heard some good news on Thursday reporting that the government has been able to trace the source of the Delta case and should be able to get the situation under control. This will be a key factor to watch for the NZD in the next few sessions. 4. CFTC Analysis Latest CFTC data for the NZD (updated until 17 August) showed a positioning change of -127 with a net non-commercial position of -362. Positioning data was very interesting for the NZD, as it didn’t show any meaningful drop in the NZD after the flush lower as markets repriced their aggressive rate hike bets going into the RBNZ meeting. With the overall optimistic rate path, the bias for the currency remains unchanged, and with positioning at neutral the current spot levels for the NZD still looks attractive. JPY FUNDAMENTAL BIAS: BEARISH 1. Safe-haven status and overall risk outlook As a safe-haven currency, the market's risk outlook is the primary driver of JPY. Economic data rarely proves market moving; and although monetary policy expectations can prove highly market-moving in the short-term, safe-haven flows are typically the more dominant factor. The market's overall risk tone has improved considerably following the pandemic with good news about successful vaccinations, and ongoing monetary and fiscal policy support paved the way for markets to expect a robust global economic recovery. Of course, there remains many uncertainties and many countries are continuing to fight virus waves, but as a whole the outlook has kept on improving over the past couple of months, which would expect safe-haven demand to diminish and result in a bearish outlook for the JPY. 2. Low-yielding currency with inverse correlation to US10Y As a low yielding currency, the JPY usually shares an inverse correlation to strong moves in yield differentials, more specifically in strong moves in US10Y . However, like most correlations, the strength of the inverse correlation between the JPY and US10Y is not perfect and will ebb and flow depending on the type of market environment from a risk and cycle point of view. 3. CFTC Analysis Latest CFTC data for the JPY (updated until 17 August) showed a positioning change of -3463 with a net non-commercial position of -66671. With positioning still the largest net-short among the majors we want to be very careful of the risks going into NFP next week. If NFP sparks concerns about potential faster tapering that could see risk assets push lower supporting the JPY as a safe haven. However, do keep the inverse correlation to US10Y in mind, because any expectations of faster tapering should support US10Y which should pressure the JPY.
by thunderpips
NZD JPY BUY (NEW ZEALAND DOLLAR - JAPANESE YEN)NZD FUNDAMENTAL BIAS: BULLISH 1. Developments surrounding the global risk outlook. As a high-beta currency, NZD has benefited from the market's improving risk outlook over recent months as participants moved out of safehavens and into riskier, higher-yielding assets. As a pro-cyclical currency, the NZD enjoyed upside alongside other cyclical assets going into what majority of market participants think was an early post-recession recovery phase. As long as expectations for the global economy remains positive the overall positive outlook for risk sentiment should be supportive for the NZD in the med-term , but the recent short-term jitters and risk off flows once again showed us why risk sentiment is also a very important short-term driver for the currency. 2. The Monetary Policy outlook for the RBNZ New Zealand’s Zero Covid strategy caused quite the rigmarole for the NZD this week as market participants were forced to unwind some of their very aggressive expectations for rate hikes going into the meeting. The unwind was so aggressive that OIS prices dropped from a 100% chance of a hike to just above 50% at some stage. The RBNZ chose to leave rates unchanged, but despite the virus escalation they offered a much more optimistic tone compared to their prior meeting by updating their rate path projections to show 7 projected hikes between Dec 2021 and H1 2023 (bringing the OCR to 2.0%). This was even more aggressive than the already aggressive bets heading into the meeting before the covid news hit the wires. The Governor also later explained that they need to continue to move on policy and cannot wait for uncertainty as they have a lot of work to do to get back to the neutral rate of 2.0%. Also, when asked about Oct Governor Orr said the meeting is live, but also acknowledged that they’ve made it very clear their next move is likely a hike so they can afford to wait. Thus, with the upgraded rate path the med-term bullish outlook remains intact for the NZD. Last week we saw very hawkish comments from RBNZ’s Hawkesby who stated that the bank’s decision not to hike rates last week was mostly to do with optics and not due to perceived risks, and also explained that the bank contemplated hiking rates by 50 basis points, confirming the bank’s hawkish tone and placing the RBNZ once again miles ahead of any other major central banks in terms of policy normalization and tightening. 3. The country’s economic and health developments The main focus right now will be on how quickly the New Zealand government can get the virus situation under control. We’ve already heard some good news on Thursday reporting that the government has been able to trace the source of the Delta case and should be able to get the situation under control. This will be a key factor to watch for the NZD in the next few sessions. 4. CFTC Analysis Latest CFTC data for the NZD (updated until 17 August) showed a positioning change of -127 with a net non-commercial position of -362. Positioning data was very interesting for the NZD, as it didn’t show any meaningful drop in the NZD after the flush lower as markets repriced their aggressive rate hike bets going into the RBNZ meeting. With the overall optimistic rate path, the bias for the currency remains unchanged, and with positioning at neutral the current spot levels for the NZD still looks attractive. JPY FUNDAMENTAL BIAS: BEARISH 1. Safe-haven status and overall risk outlook As a safe-haven currency, the market's risk outlook is the primary driver of JPY. Economic data rarely proves market moving; and although monetary policy expectations can prove highly market-moving in the short-term, safe-haven flows are typically the more dominant factor. The market's overall risk tone has improved considerably following the pandemic with good news about successful vaccinations, and ongoing monetary and fiscal policy support paved the way for markets to expect a robust global economic recovery. Of course, there remains many uncertainties and many countries are continuing to fight virus waves, but as a whole the outlook has kept on improving over the past couple of months, which would expect safe-haven demand to diminish and result in a bearish outlook for the JPY. 2. Low-yielding currency with inverse correlation to US10Y As a low yielding currency, the JPY usually shares an inverse correlation to strong moves in yield differentials, more specifically in strong moves in US10Y . However, like most correlations, the strength of the inverse correlation between the JPY and US10Y is not perfect and will ebb and flow depending on the type of market environment from a risk and cycle point of view. 3. CFTC Analysis Latest CFTC data for the JPY (updated until 17 August) showed a positioning change of -3463 with a net non-commercial position of -66671. With positioning still the largest net-short among the majors we want to be very careful of the risks going into NFP next week. If NFP sparks concerns about potential faster tapering that could see risk assets push lower supporting the JPY as a safe haven. However, do keep the inverse correlation to US10Y in mind, because any expectations of faster tapering should support US10Y which should pressure the JPY.
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NZD JPY BUY (NEW ZEALAND DOLLAR - JAPANESE YEN)NZD FUNDAMENTAL BIAS: BULLISH 1. Developments surrounding the global risk outlook. As a high-beta currency, NZD has benefited from the market's improving risk outlook over recent months as participants moved out of safehavens and into riskier, higher-yielding assets. As a pro-cyclical currency, the NZD enjoyed upside alongside other cyclical assets going into what majority of market participants think was an early post-recession recovery phase. As long as expectations for the global economy remains positive the overall positive outlook for risk sentiment should be supportive for the NZD in the med-term, but the recent short-term jitters and risk off flows once again showed us why risk sentiment is also a very important short-term driver for the currency. 2. The Monetary Policy outlook for the RBNZ New Zealand’s Zero Covid strategy caused quite the rigmarole for the NZD this week as market participants were forced to unwind some of their very aggressive expectations for rate hikes going into the meeting. The unwind was so aggressive that OIS prices dropped from a 100% chance of a hike to just above 50% at some stage. The RBNZ chose to leave rates unchanged, but despite the virus escalation they offered a much more optimistic tone compared to their prior meeting by updating their rate path projections to show 7 projected hikes between Dec 2021 and H1 2023 (bringing the OCR to 2.0%). This was even more aggressive than the already aggressive bets heading into the meeting before the covid news hit the wires. The Governor also later explained that they need to continue to move on policy and cannot wait for uncertainty as they have a lot of work to do to get back to the neutral rate of 2.0%. Also, when asked about Oct Governor Orr said the meeting is live, but also acknowledged that they’ve made it very clear their next move is likely a hike so they can afford to wait. Thus, with the upgraded rate path the med-term bullish outlook remains intact for the NZD. 3. The country’s economic and health developments The main focus right now will be on how quickly the New Zealand government can get the virus situation under control. We’ve already heard some good news on Thursday reporting that the government has been able to trace the source of the Delta case and should be able to get the situation under control. This will be a key factor to watch for the NZD in the next few sessions. 4. CFTC Analysis Latest CFTC data for the NZD (updated until 17 August) showed a positioning change of 797 with a net non-commercial position of -235. It’s important to keep in mind the data will not reflect the big flush lower in the NZD we saw after the virus situation caused market participants to dial down their aggressive hike expectations for the RBNZ. With the overall optimistic rate path the bias for the currency remains unchanged, and with positioning at neutral the current spot levels for the NZD still looks attractive. JPY FUNDAMENTAL BIAS: BEARISH 1. Safe-haven status and overall risk outlook As a safe-haven currency, the market's risk outlook is the primary driver of JPY. Economic data rarely proves market moving; and although monetary policy expectations can prove highly market-moving in the short-term, safe-haven flows are typically the more dominant factor. The market's overall risk tone has improved considerably following the pandemic with good news about successful vaccinations, and ongoing monetary and fiscal policy support paved the way for markets to expect a robust global economic recovery. Of course, there remains many uncertainties and many countries are continuing to fight virus waves, but as a whole the outlook has kept on improving over the past couple of months, which would expect safe-haven demand to diminish and result in a bearish outlook for the JPY. 2. Low-yielding currency with inverse correlation to US10Y As a low yielding currency, the JPY usually shares an inverse correlation to strong moves in yield differentials, more specifically in strong moves in US10Y . However, like most correlations, the strength of the inverse correlation between the JPY and US10Y is not perfect and will ebb and flow depending on the type of market environment from a risk and cycle point of view. 3. CFTC Analysis Latest CFTC data for the JPY (updated until 17 August) showed a positioning change of -2551 with a net non-commercial position of -63208. The big net-short created some additional momentum to the upside for the JPY this week as risk sentiment soured and demand for safe havens rose. With positioning still the largest net-short among the majors we want to be very careful of the risks going into the Jackson Hole symposium next week. If the symposium doesn’t provide any hints of tapering though it could open up some opportunities in the battered currency pairs like NZDJPY and CADJPY etc.
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