- NZD/JPY hit its highest levels since November 2021 at 79.80 on Thursday, with commodity-linked currencies such as the kiwi outperforming.
- The kiwi has benefited from higher commodity prices, which are positive for New Zealand’s terms of trade.
- It looks like the 80.00 level could very well be there for the NZD/JPY in the days ahead.
The NZD/JPY hit its highest levels since November 2021 at 79.80 on Thursday, with commodity-linked currencies like the Kiwi (and Australian and Canadian dollars) in demand on the back of recent price surges across the commodity complex in recent sessions, even though commodities were mostly dovish on Thursday. While risk assets (such as global stocks) have been under pressure and choppy in recent days amid fears of stagflation as a result of the Ukraine conflict, they remain elevated, and while this may well have slowed the recent rise in the NZD/JPY, traders seem to be taking a more optimistic view that the commodity price rise will be a net benefit for the kiwi. Higher commodity prices are certainly a boon to the terms of trade of net commodity exporting nations like New Zealand.
The other view in favor of the kiwi is that the RBNZ, concerned about already very high inflationary pressures in New Zealand, the historically tight labor market and elevated house prices, may well accelerate the pace of monetary policy tightening in the coming months. next months. That puts upward pressure on long-term New Zealand government bond yields, attracting cash flows out of Japan, where long-term yields remain low near zero amid curve control policy. BoJ yield. It looks like the 80.00 level could very well be there for the NZD/JPY in the days ahead.
As has been the case in recent weeks, any momentary weakness in the kiwi related to risk aversion as a result of concerns about the Ukraine war and its global economic impact will likely be seen as a buying opportunity by those who want to bet that the rise in commodities (also as a result of the Ukraine crisis) will lift the NZD. If the NZD/JPY breaks above the 80.00 level, the next really significant support area is in the 82.25-82.50 area. Already up 2.5% on the month, it may take some time for the pair to gain more than 3.0% in this area.
Additional technical levels
Source: Fx Street
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