The rates continue in the frames of a weak uptrend, though it tends to move down towards the support line. Overall, according to the chart, you can see signs of the formation of a downward trend, and there are a number of preconditions for this change.
This week the rates held in favor of the JPY. After the market reacted negatively to the decision of the Bank of Japan to leave interest rates unchanged, the situation changed. New economic data from Japan supports the yen and would allow it to strengthen against the NZD. In particular, the PMI index of business activity in the service sector in October reached a 26-month high with 53.4 pips. In addition, it became known that the average level of salaries in September increased by 0.9% YoY, which gives preconditions for further inflation growth and achievement of the target level. The consumer confidence index reached 44.5 pips in September, which is the highest level since September 2013.
The New Zealand dollar this week has a lack of support to withstand the strong yen. The NZD is losing positions against most currencies. Today investors expect the RBNZ decision about the interest rate and the report on monetary policy. It is expected that interest ratse will be left unchanged once again, given the recent consumer credit report, according to which the regulator has lowered expectations for inflation and the GDP for the next two years. The decision to leave the rate at the current level, of course, negatively affect the value of the NZD. In addition, the kiwi's value was negatively impacted by commodity prices in October. In particular, the cost of dairy products decreased by 3.1%. As a result, the index of commodity prices from ANZ has decreased in October by 0.3% after rising in September by 0.8%.
The Stochastic oscillator signals a good moment for the deals to sell the pair. The short trades would be the most effective at the moment, given the current economic situation in Japan and New Zealand.
