The New Zealand dollar (NZD) has faced downward pressure recently due to a growing risk aversion among investors. This was highlighted by a drop in the NZD's value, although it managed to recover some losses shortly thereafter. Analysts suggest that future NZD exchange rates will be influenced heavily by manufacturing PMI data and general risk appetite, highlighting its sensitivity as a risk-sensitive currency. With the US-China trade tensions and potential new tariffs under another Trump presidency looming, demand for New Zealand's key commodities could falter, which may indicate further strains on the NZD moving forward.
On the other hand, the Japanese yen (JPY), known for its status as a safe-haven asset, has shown strength amidst ongoing global economic uncertainties. This is partly due to renewed trade tensions, particularly following the imposition of a 24% reciprocal tariff rate on Japanese goods by the US. MUFG Research projects a gradual depreciation of the yen against the dollar, with an expected USD/JPY exchange rate of 154.00 in Q1 2025, declining to 148.00 by Q4. However, the recent depreciation of the yen against the dollar might necessitate adjustments to these forecasts, reflecting its complex relationship with global market dynamics.
Current data shows NZD/JPY trading at 7-day lows near 86.73, which is approximately 1.4% above its 3-month average of 85.5, displaying volatility with a recent movement range between 80.96 and 87.69. This volatility reflects broader market sentiments that could impact both currencies. Furthermore, fluctuations in oil prices, currently trading at 74.23 and significantly above its 3-month average, may also introduce additional pressures. A 10.9% rise in oil prices likely complicates Japan’s economic landscape, as increased commodity prices may weigh on the yen.
In summary, the upcoming economic data and shifts in market sentiment will be crucial in determining the future trajectory of the NZD/JPY exchange rate. Traders should remain vigilant to global developments, particularly those affecting risk appetite and trade dynamics, as these will ultimately shape both currencies in the months ahead.