The rates are kept within an uptrend. However, the market situation has changed, and the New Zealand dollar was under strong pressure, despite the recovery of the global economy and the economy of New Zealand. Since June, the upward momentum has been lost. So far, everything looks like a standard price correction, but long-term consolidation is not excluded.
The Japanese yen is unlikely to strengthen against the NZD, by relying on achievements within its domestic economy. So far, we have observed a worsening in the economic situation: unemployment is growing and industrial production output fell by 5.9% in May, which was not expected according to forecasts. Nevertheless, the yen received support against the currencies of the Asia-Pacific region, as well as in the confrontation with the pound, being a safe asset, due to the spread of a new and more dangerous strain of the coronavirus, nicknamed type "Delta." This threatens a new lockdown and problems in the economy for Australia, UK and New Zealand.
At the moment, according to reports for the previous month, the New Zealand economy is in the growth stage: the trade surplus is growing and and GDP in the first quarter exceeded the forecasts. But in the event of a further spread of the coronavirus, everything can change quickly. Macroeconomic indicators in China, New Zealand's largest trading partner, do not contribute to the strengthening of the NZD because they are showing a weak growth.
In the near future, the NZD/JPY quotes will depend on the success of the fight against the Deltra strain of Covid-19 in the region. Also, this week, the publication of the TANKAN producer sentiment index is in the focus of investors' attention. Most technical analysis tools indicate the efficiency of the deals in favor of the JPY. Such deals would be effective in the short term. We can safely expect a new testing of the support line and even it shifting, but the decline will be limited. As soon as investors' fears about the development of the pandemic are dispelled, we expect a resumption of the upward movement. Therefore, we consider the deals to BUY to be promising in long-term trading.
