The downward trend continues under the influence of the economic recession in the world economy due to the coronavirus pandemic. Last week, we saw the strengthening of commodity currencies considering the stabilization of the situation in China and the recovery of industrial production output, which is reflected in the business activity indices. Therefore, there are good perspectives for New Zealand to restore export volumes to China. However, in the rest of the world, the coronavirus continues spreading, and the US has become the leader in the number of infected people. In this regard, investor sentiment is not improving, and demand for safe assets remains high. Periods of optimism are short-term, which does not allow commodity assets to recover significantly.
This week, we see a resumption of the downward movement in favor of the JPY, after a price correction. Macroeconomic reports from Japan were mixed, but the overall market situation is in favor of the JPY. Despite the recovery of production in China, its economy will remain under pressure due to the continuation of the pandemic in the world. Thus, export potential is expected to be extremely limited. The New Zealand dollar in this situation may be one of the most stable among commodity currencies because New Zealand exports food. However, the JPY is stronger in any case, given the increased demand for safe assets.
Therefore, we believe that the deals to SELL are the most promising at the moment, which is confirmed by most technical analysis tools, including the MACD oscillator.
