The NZDJPY price was taking a pause ahead of key GDP numbers for the Kiwi economy. Tomorrow sees the release of second quarter GDP for New Zealand with analysts expecting a print of -13.3% on an annualized basis.
New Zealand’s response to contain the coronavirus outbreak is likely to translate into a less severe contraction than expected, although stricter lockdowns and borders controls may imply a slower economic recovery over the long-term. New Zealand closed its border early on in the outbreak and imposed strict border controls. Air New Zealand said today that it plans to cut up to 385 more cabin crew jobs, which would take its job losses to almost 37% of its workforce.
New Zealand is currently considering negative interest rates and this could affect the bullish sentiment going further. Reserve Bank of New Zealand Governor Adrian Orr said that negative rates would not be used on their own, but as part of a package of measures.
Japan saw a new Prime Minister taking over from Shinzo Abe but Yosihide Suga was a key confidante of Abe in the past and is unlikely to stray too far from his predecessor’s policies. The Bank of Japan kept its interest rate at -0.1% in its most recent meeting and kept the target for the 10-year bond yield at around 0% during its July meeting, which was passed by an 8-1 vote.
NZDJPY Technical Outlook
The NZDJPY is trading at 70.86 with resistance ahead at 71.70. This level will be the obstacle to further gains for the pair but the market will need clarity from the GDP release before placing any large bets. Support levels are at 69.00 and could see a correction if the market moves below that level.