Forex Market: NZD/JPY trading forecast for September 21st

Friday’s trade saw NZD/JPY within the range of 75.92-77.12. The pair closed at 76.75, soaring 0.72% on a daily basis, or the most considerable daily gain since September 9th, when it appreciated 1.39%. The daily low has been the lowest level since September 15th, when the cross registered a high of 75.29. In weekly terms, NZD/JPY advanced 0.76%, marking a second consecutive weekly increase.

No relevant macroeconomic reports and other events, which might influence NZD/JPY trading, are scheduled on Monday (September 21st).

Japan

Respect for the Aged Day Holiday

September 21st is the Japanese Respect for the Aged Day Holiday, which after 2003 is celebrated on every third Monday of September. On this day the media in the country report on the population and highlight the oldest citizens. Banks in Japan are to remain closed.

Correlation with Major Pairs

Taking into account the week ended on September 20th and the daily closing levels of the currency pairs involved, we come to the following conclusions in regard to the strength of relationship:

NZD/JPY to NZD/USD (0.8499, or very strong)
NZD/JPY to AUD/USD (0.6731, or strong)
NZD/JPY to USD/CHF (0.5554, or strong)
NZD/JPY to USD/JPY (0.3837, or moderate)
NZD/JPY to GBP/USD (-0.0209, or very weak)
NZD/JPY to USD/CAD (-0.3403, or moderate)
NZD/JPY to EUR/USD (-0.6081, or strong)

1. During the examined period NZD/JPY moved almost equally in one and the same direction with NZD/USD.

2. NZD/JPY moved strongly in the opposite direction compared to EUR/USD during the past week, while moving strongly in one and the same direction with AUD/USD and USD/CHF.

3. The correlation between NZD/JPY and USD/JPY, NZD/JPY and USD/CAD was moderate.

4. NZD/JPY moved almost independently compared to GBP/USD during the period in question.

Bond Yield Spread

The yield on New Zealands 2-year government bonds went as high as 2.465% on September 18th, after which it closed at the exact same level to lose 3.5 basis points (0.035 percentage point) on a daily basis. It has been the first drop in the past three trading days.

The yield on Japans 2-year government bonds climbed as high as 0.026% on September 18th, or matching the high from the prior trading day, after which it fell to 0.019% at the close to lose 0.007 percentage point for the day. It has been the first drop in the past four trading days.

The spread between 2-year New Zealand and 2-year Japanese bond yields, which reflects the flow of funds in a short term, shrank to 2.446% on September 18th from 2.474% during the prior day. The September 18th yield spread has been the lowest one since September 15th, when the difference was 2.434%.

Meanwhile, the yield on New Zealands 10-year government bonds soared as high as 3.350% on September 18th, after which it closed at the exact same level to lose 3.5 basis points (0.035 percentage point) compared to September 17th. It has been the first decrease in the past four trading days.

The yield on Japans 10-year government bonds climbed as high as 0.371% on September 18th, after which it slipped to 0.339% at the close to lose 3.2 basis points (0.032 percentage point) on a daily basis, while marking a second consecutive day of decline.

The spread between 10-year New Zealand and 10-year Japanese bond yields narrowed to 3.011% on September 18th from 3.014% during the prior day. The September 18th yield difference has been the lowest one since September 16th, when the spread was 2.970%.

Daily and Weekly Pivot Levels

By employing the traditional calculation method, the Monday pivot levels for NZD/JPY are presented as follows:

Central Pivot Point – 76.60
R1 – 77.27
R2 – 77.80
R3 – 78.47

S1 – 76.07
S2 – 75.40
S3 – 74.87

By using the traditional method of calculation again, the weekly pivot levels for NZD/JPY are presented as follows:

Central Pivot Point – 76.53
R1 – 77.78
R2 – 78.80
R3 – 80.05

S1 – 75.51
S2 – 74.26
S3 – 73.24