NZD-JPY
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NZDJPY Trading
NZDJPY is the ticker symbol for the New Zealand dollar to Japanese yen exchange rate in the forex market. The New Zealand dollar and the Japanese yen are considered major currencies, but the NZDJPY is regarded as a minor pair because it does not constitute the US dollar (USD). Minor currency pairs typically feature lower liquidity and trading volumes compared to major currency pairs. They are also traded with relatively wider spreads. The NZDJPY currency pair also has carry trade properties. The Japanese yen is a low-yielding, stable currency, whereas the New Zealand dollar is a high-yielding, growth currency.
In the NZDJPY Forex rate, NZD is the base currency, whereas JPY is the quote/counter currency. This means that at any given time, the price of the NZDJPY represents the number of Japanese yen it would take to exchange for one unit of the New Zealand dollar (1 NZD to JPY).
History of NZDJPY
The New Zealand dollar is the official currency of New Zealand, the Cook Islands, Niue, Tokelau, and the Pitcairn Islands. The NZD is nicknamed ‘Kiwi’ in reference to the native, flightless birds of New Zealand. The currency was introduced in 1967 as the country moved to decimalize its currency after utilizing the complex Sterling system with the previous New Zealand pound. Despite New Zealand being the 50th largest economy by nominal GDP, its currency is the 10th most traded in the global forex markets as of September 2022. This is due to the high yields of the currency, which makes the NZD a good target for carry trade strategies. New Zealand boasts a unique location and quality trading partners as a country. The Oceanic island state counts Australia and China as major trading partners, and this has led forex traders to trade the NZD to get exposed to the economies of Southeast Asia. The NZD is also one of the foremost ‘commodity dollars’ in the forex markets. Commodity dollars tend to be influenced by the price fluctuations of commodities in the international markets. New Zealand’s economy is underpinned by agricultural products (mainly dairy) production and export. The country also counts tourism as one of its major revenue earners.
On the other hand, the Japanese yen is the official currency of Japan. Introduced in 1871, the JPY is the 3rd most traded currency in the global forex markets, as of September 2022, trailing only the USD and EUR. The JPY had a roller-coaster 20th century, with multiple events
significantly impacting its value:
- Japan’s devastating loss in World War II
- The collapse of the Bretton Woods System in the 1970s
- The Plaza Accord of the mid-1980s
- The Japanese Asset bubble of the early 1990s
At the turn of the millennium, Japan implemented monetary easing policies combined with structural and fiscal reforms to sustain its highly dynamic and developed economy.
NZDJPY Historical Price Performance
When looking at the NZDJPY technical analysis, the NZDJPY pair was in the middle of an ongoing downtrend when it traded just above 50.00 at the turn of the millennium. The tumble continued to 40.00 before the pair reversed course and embarked on a multi-year rally, peaking around 95.00 by mid-2007. The 2008 Great Recession’s effects triggered a sharp fall to below 45.00 by January 2009. The pair, however, turned higher again and revisited peaks of around 95.00 by December 2014. It then steadily retreated lower, printing a trough of just below 65.00 in early 2020. Since then, it has maintained an upward trajectory, and as of September 2022, it trades above 85.00.
Major Bodies Influencing the NZDJPY
When you engage in NZD/JPY trading, here are some factors to consider:
Reserve Bank of New Zealand (RBNZ)
The RBNZ is the central banking system of New Zealand. With the mandate to ensure price stability and maintain a sound monetary environment, the events of the RBNZ are closely followed by NZD traders. The RBNZ releases Monetary Policy Decisions seven times a year and Monetary Policy Statements four times a year. It also publishes Financial Stability Reports twice a year.
Statistics New Zealand
Statistics New Zealand is tasked with producing, analyzing, and publishing objective statistical information on the people, life, and economy of New Zealand. The agency’s key indicators relevant to NZD traders include the GDP, Consumer Price Index, Inflation, Unemployment Rate, Imports & Exports, and Travel & Tourism data.
Bank of Japan (BOJ)
The BOJ is the central bank of Japan. The bank releases its interest rates and the accompanying monetary policy statements eight times a year. JPY traders also track statements and other press releases outside scheduled events because the BOJ is historically a very active central bank in the forex markets. Rate hikes are bullish for the JPY, whereas rate cuts pressure the currency lower. Similarly, hawkish BOJ statements or headlines are bullish for the JPY, whereas a dovish tone is bearish for the currency.
NZD/JPY Correlations – NZD to JPY Trading
Asset correlations show whether, over time, assets move in the same direction, opposite, or in a completely random manner in relation to other assets. This can help traders diversify/hedge risks and unlock trading opportunities in the market. The NZD to JPY pair tends to be positively correlated with the AUDJPY, CADJPY, SGDJPY, CHFJPY, and EURJPY. The NZDJPY pair tends to be negatively correlated with the GBPCAD, GBPMXN, GBPCHF, GBPSGD, and GBPAUD.
