New Zealand reported a duo of economic reports which showed that the economy cooled down further. After the central bank cut interest rates, forex traders try to determine if more cuts are on the horizon or what other measures will be deployed. The New Zealand economy is heavily dependent on commodity exports, mainly to China, as well as closely tied to the Australian economy. Australian economic data released this morning also showed a slower economy ahead. The NZDJPY is pressuring support levels, is a breakdown imminent or will the threat of interventions by the Bank of Japan result in a price action reversal? Today’s fundamental analysis will take a look at the upside potential and downside risk of this currency pair.
Japanese household confidence decreased further in August and remains at depressed levels. The stronger Japanese Yen is not providing a spark to the consumer, but is impacting Japan’s exporter in a negative way. The currency is attracting plenty of capital inflow due to his save haven status, but the Bank of Japan warned traders that it will not stand by and allow the Japanese Yen to strengthen much further and harm its struggling economy. When will the central bank intervene and weaken its currency? Should forex traders look for long trading opportunities in the NZDJPY? Follow the PaxForex Daily Fundamental Analysis and take the profitable side of this trade!
Here are the key factors to keep in mind today for New Zealand Dollar trades:
- New Zealand ANZ Activity Outlook and ANZ Business Confidence: The New Zealand ANZ Activity Outlook for August was reported at -0.5 and ANZ Business Confidence was reported at -52.3. Forex traders can compare this to the New Zealand ANZ Activity Outlook for July which was reported at 5.0 and to ANZ Business Confidence which was reported at -44.3.
- Australian Capital Expenditure: Australian Private Capital Expenditure for the second-quarter decreased by 0.5% quarterly. Economists predicted an increase of 0.5% quarterly. Forex traders can compare this to Australian Private Capital Expenditure for the first-quarter which decreased by 1.3% quarterly. Australian Building Capital Expenditure for the second-quarter decreased by 3.3% quarterly. Forex traders can compare this to Australian Building Capital Expenditure for the first-quarter which decreased by 1.9% quarterly. Australian Plant & Machinery Capital Expenditure for the second-quarter increased by 2.5% quarterly. Forex traders can compare this to Australian Plant & Machinery Capital Expenditure for the first-quarter which decreased by 0.5% quarterly.
Here are the key factors to keep in mind today for Japanese Yen trades:
- Japanese Buying Foreign Bonds and Japanese Buying Foreign Stocks/Foreign Buying Japanese Bonds and Foreigners Buying Japanese Stocks: Japanese Buying Foreign Bonds for the period ending August 23rd was reported at -¥911.9B and Japanese Buying Foreign Stocks was reported at ¥234.8B. Forex traders can compare this to Japanese Buying Foreign Bonds for the period ending August 16th which was reported at ¥499.8B and to Japanese Buying Foreign Stocks which was reported at -¥105.6B. Foreign Buying Japanese Bonds for the period ending August 23rd was reported at -¥103.5B and Foreigners Buying Japanese Stocks was reported at ¥3.9B. Forex traders can compare this to Foreign Buying Japanese Bonds for the period ending August 16th which was reported at -¥52.1B and to Foreigners Buying Japanese Stocks which was reported at -¥359.6B.
- Japanese Loans & Discounts: Japanese Loans & Discounts for July increased by 2.40% annualized. Forex traders can compare this to Japanese Loans & Discounts for June which increased by 2.73%.
- Japanese Household Confidence: Japanese Household Confidence for August was reported at 37.1. Forex traders can compare this to Japanese Household Confidence for July which was reported at 37.8.
Should price action for the NZDJPY remain inside the or breakout above the 66.300 to 67.250 zone the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Long Position @ 66.800
- Take Profit Zone: 69.600 – 70.000
- Stop Loss Level: 66.000
Should price action for the NZDJPY breakdown below 66.300 the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Short Position @ 65.800
- Take Profit Zone: 63.550 – 64.250
- Stop Loss Level: 66.300
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