Forex Market: NZD/JPY trading forecast for September 28th

Friday’s trade saw NZD/JPY within the range of 75.71-77.25. The pair closed at 77.00, soaring 0.88% on a daily basis, or the most considerable daily gain since September 9th, when it appreciated 1.39%. The daily high has been the highest level since September 17th, when the cross registered a high of 77.63. In weekly terms, NZD/JPY added 0.33%, while marking a third successive week of gains.

No relevant macroeconomic reports and other events, which may influence NZD/JPY trading, are scheduled for Monday (September 28th).

Correlation with Major Pairs

Taking into account the week ended on September 27th 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 (0.9746, or very strong)
NZD/JPY to USD/JPY (0.5185, or strong)
NZD/JPY to EUR/USD (0.5135, or strong)
NZD/JPY to USD/CAD (0.3971, or moderate)
NZD/JPY to USD/CHF (-0.0166, or very weak)
NZD/JPY to AUD/USD (-0.1100, or weak)
NZD/JPY to GBP/USD (-0.3277, or moderate)

1. During the examined period NZD/JPY moved strongly in one and the same direction with EUR/USD and USD/JPY, while moving almost equally in one and the same direction with NZD/USD.

2. NZD/JPY moved almost independently compared to USD/CHF during the past week.

3. The correlation between NZD/JPY and USD/CAD, NZD/JPY and GBP/USD was moderate during the period in question.

Bond Yield Spread

The yield on New Zealands 2-year government bonds went as high as 2.530% on September 25th, or the highest level since September 16th (2.540%), after which it slid to 2.515% at the close to add 3.5 basis points (0.035 percentage point) on a daily basis, while marking a second consecutive trading day of gains.

The yield on Japans 2-year government bonds climbed as high as 0.017% on September 25th, after which it fell to 0.014% at the close to lose 0.002 percentage point for the day, while marking a third consecutive trading day of decline.

The spread between 2-year New Zealand and 2-year Japanese bond yields, which reflects the flow of funds in a short term, widened to 2.501% on September 25th from 2.464% during the prior day. The September 25th yield spread has been the most notable one since September 9th, when the difference was 2.580%.

Meanwhile, the yield on New Zealands 10-year government bonds soared as high as 3.360% on September 25th, or the highest level since September 17th (3.395%), after which it slid to 3.345% at the close to appreciate 3.5 basis points (0.035 percentage point) compared to September 24th, while marking a second straight trading day of gains.

The yield on Japans 10-year government bonds climbed as high as 0.338% on September 25th, or the highest level since September 18th (0.371%), after which it slipped to 0.329% at the close to lose 0.004 percentage point on a daily basis, while marking a fourth consecutive trading day of decrease.

The spread between 10-year New Zealand and 10-year Japanese bond yields expanded to 3.016% on September 25th from 2.977% during the prior day. The September 25th yield difference has been the largest one since July 30th, when the spread was 3.039%.

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 – 76.65
R1 – 77.60
R2 – 78.19
R3 – 79.14

S1 – 76.06
S2 – 75.11
S3 – 74.52

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

Central Pivot Point – 76.36
R1 – 77.89
R2 – 78.78
R3 – 80.31

S1 – 75.47
S2 – 73.94
S3 – 73.05