Recent forecasts suggest a complex landscape for the NZD/JPY exchange rate, influenced by both local sentiments in New Zealand and broader economic conditions affecting the Japanese yen.
The New Zealand dollar (NZD) recently experienced a decline, primarily driven by a risk-off mood in the markets. Analysts have noted that this risk sensitivity can significantly impact the NZD, especially in the absence of substantial local data releases. Moreover, potential trade disruptions stemming from American tariff policies under a possible second Trump presidency pose further risks to New Zealand's key commodities, likely dampening demand for the currency.
On the other hand, the Japanese yen (JPY) is benefiting from its status as a safe-haven asset amid global economic uncertainties. Geopolitical tensions and trade negotiations have bolstered demand for the yen, as investors flee towards more stable currencies. MUFG Research has set a forecast of 154.00 for the USD/JPY exchange rate in Q1 2025, with expectations of a gradual decline to 148.00 by Q4 2025. However, fluctuations in the USD's strength and potential reassessments following Japan's recent depreciation against the dollar may affect these projections.
Currently, the NZD/JPY rate is around 88.02, marking a 90-day high and 2.5% above its 3-month average of 85.86. This price movement reflects volatility in the market, with the pair trading within an 8.7% range from 80.96 to 88.02. The NZD and JPY are also impacted by market correlations with commodity prices, especially oil. Recently, Brent Crude OIL/USD trades at 68.80 represent a 3.2% gain above its 3-month average of 66.66, having fluctuated in a significant 31.1% range from 60.14 to 78.85. Rising oil prices can indirectly affect the yen through trade balances and economic growth, highlighting the interconnectedness of these markets.
In conclusion, the NZD/JPY exchange rate is currently influenced by a mix of local economic sentiments surrounding the NZD and the JPY’s robust positioning as a safe haven. Investors should remain attentive to ongoing geopolitical developments, trade dynamics, and shifts in commodity prices, all of which could significantly sway exchange rates in the coming months.