NZD/JPY is hesitating amid a bull run, backing into 78.00 on low volumes

  • The Kiwi is walking back gains from the early Asia session as risk sentiment balances back out.
  • NZ GDP, Japan Foreign Investment could pose a volatility threat late Wednesday.

The NZD/JPY has backed off an Asia session high of 78.30 and is back down near 78.10 as the Kiwi cools off and markets attempt a swing back to normalcy following Tuesday's Trump-fueled risk aversion.

The broader markets took a header on Tuesday as risk aversion spiked once more, this time on the heels of Trump firing his own hand-selected Secretary of State, Rex Tillerson. Trump's plans to seek new tariffs against China also leaked, and Trump will be looking for $60B worth of tariffs on Chinese-made goods including electronics, telecommunications, toys, and furniture.

Late Wednesday will be seeing New Zealand's GDP figures at 21:45 GMT; the annual rate is expected to come in at 3.1% versus the previous 2.7%, and a sign of growth will be a welcome boon to Kiwi bulls as New Zealand's economy has lagged behind global growth trends lately. At 23:50 GMT will be Japan's Foreign Investment in Stocks and Bonds, and the previous figures showed a deep contraction as foreign investment has fled the country seeking higher interest rates that are likely to come from other central banks soon, while the Bank of Japan (BoJ) is stoically committed to their easy monetary policy until inflation reaches their lofty 2% target.

Risk appetite has been souring in Asia this week following revelations that Japan's Finance Minister, Taro Aso, is involved in a political scandal that sees Japan's finance ministry forging documents involved in a steeply-discounted sale of government land to a school operator with ties to Shinzo Abe's wife. Abe is the Premier of Japan, and the formal opposition party is outraged, calling for Aso to step down from his position and accept responsibility for the scandal. The impact of the discovery is beginning to wane in markets as Trump resumes filling headlines with his antics and the revolving-door on his administration.

NZD/JPY Technicals

The pair is leaning to the bullish side, but plenty of resistance remains as Daily candles begin to run into resistance from the 34 EMA. On H4 charts the pair has plenty of bullish potential built-in, though a continued correction from this level could see support from the last swing low at 77.60 and the 50.0 Fibo level at 77.25, while resistance builds at the 34-day EMA currently near 78.30, and the last swing high of 78.62.

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