The rates continue within the downward trend, due to the high demand for safe assets. At the same time, during the week, we have observed a decrease in volatility and a consolidation in the thin range of 68,004 - 68,566 JPY. Both currencies are under pressure and cannot find incentives to strengthen.
The New Zealand dollar declined rapidly due to the trade conflict between China and the United States, as well as the lack of prospects for its resolution. The economic situation in New Zealand motivated the RBNZ to rapidly soften monetary policy: in August, the rate was radically reduced by 50 pips at once, and a further reduction is not impossible. This certainly had a negative impact on the cost of the NZD. Recent macroeconomic reports were mixed: business activity in the services sector increased in July, but fell below 50 pips in the manufacturing sector.
Ehe economic situation in Japan is also worsening and manufacturers for the first time in 6 years began to negatively assess the perspectives for business development, given the recession in the global economy. Industrial production output is declining. There has also been a decrease in exports for the eighth month in a row. So, the trade balance became negative again in July. However, the JPY, having the status of a safe asset, remains at a high level, and given all external factors, may remain the strongest currency in the future, especially against the NZD, which is more vulnerable in a recession in the global economy, and especially if the decline is observed in China and Australia.
Therefore, taking into account all external factors, we believe that the deals on the trend will be the most effective in the medium term. Most technical analysis tools also tend twards the deals to SELL. The entry points can be specified at the levels of 68.004 and 68.566, the achievement of which would indicate a continuation of the trend or the beginning of a price correction.
