The NZD to JPY exchange rate has recently been experiencing downward pressure, trading at 7-day lows near 87.14, just below its 3-month average. This has occurred amid a cautious trading environment and a strengthening USD, which has diminished the appeal of the New Zealand dollar (NZD). Analysts suggest that the NZD could face further losses if risk aversion persists in the market.
Recent economic indicators are also contributing to the NZD's challenges. New Zealand’s unemployment rate increased to 5.2% in Q2 2025, alongside a slight decline in employment. This softness in the labor market has heightened expectations for a 25 basis-point interest rate cut by the Reserve Bank of New Zealand (RBNZ) at its upcoming meeting, adding additional pressure on the NZD. Although inflation expectations remain stable, the imposition of U.S. tariffs on New Zealand exports could negatively impact the country's export-driven economy.
Meanwhile, the Japanese yen (JPY) operates within a complex landscape influenced by various factors. Political uncertainty surrounding Prime Minister Shigeru Ishiba has raised concerns about potential delays in key policy decisions and interest rate hikes. However, indications from the Bank of Japan (BOJ) suggest a consideration of interest rate hikes due to increasing inflationary pressures, although caution remains due to external risks.
Furthermore, ongoing global trade tensions, particularly the U.S. tariffs on Japanese goods, are also weighing on the JPY. The yen is viewed as a safe-haven asset, and current geopolitical tensions may bolster its demand. However, the prevailing global risk sentiment remains cautious, posing limits on the yen’s appreciation potential.
Recent oil movements are noteworthy as well. The oil price (OIL to USD) is currently at $65.85, significantly below its 3-month average, and has exhibited considerable volatility. Given that oil prices can influence the JPY, particularly through trade channels, any continued weakness in oil may have implications for the yen's performance.
Overall, the exchange rate outlook for the NZD against the JPY appears influenced by domestic economic circumstances and international market dynamics. Traders should closely monitor the evolving labor market conditions in New Zealand, interest rate decisions by both the RBNZ and BOJ, as well as developments in global trade to anticipate movements in the NZD/JPY exchange rate.
