NZD/JPY: carving a well defined range - Westpac

Analysts at Westpac offered their outlook for NZD/JPY.

Key Quotes:

"1 week: The cross has carved out a well-defined range during the past two months, between 80.30 and 83.85, and needs a break outside to establish medium-term direction.

"The yen has benefited recently from geopolitical concerns (US, Europe) and should continue to feed on such events. Speculative yen long positions have clearly been culled, if CFTC positioning is a guide, allowing for a rebuild."

"The event calendar contains a reasonable run of data this week in Japan with Jan trade data Monday, flash PMI Tuesday and the Cabinet Office monthly Thursday."

"Expecting to see seasonal softening in Jan exports, but this update will mark the 5th consecutive trade surplus in Japan, a clear sign the current account recovery is well under way.

3 months: With the BoJ continuing its ‘soft taper’ we see few if any compelling Japan-centric reasons to sell the ¥."

"We are thus skeptical 2016’s rally in NZD/JPY will persist in 2017. More likely, we see a decline to around 80.00."