Matt Simpson, CFTe, MSTA
CityIndex
What a difference a few days can make. Less than one week ago I was seeking short setup below 86.0 and now we find ourselves on the cusp of breaking to multi-month highs.
NZDJPY is a great barometer of risk (just like the stock market) as investors take advantage of the yield differentials, to push the currency pair up. Conversely in times of uncertainty and fear, NZDJPY will be dumped very quickly to offer traders great shorting opportunities.
We can see NZDJPY is clearly within a risk-on environment and I have overlaid the Dow Jones Industrial average (faded in the background) to show that the Index has broken to new highs, which may see NZDJPY follow suit shortly.
Following decent employment figures from New Zealand today, the carry trade is clearly back in favour, which has been accelerated by Yen weakness following additional stimulus from Bank of Japan on Friday.
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