NXDJPY Daily path in expectation of a RBNZ rate hike
Updated
NZDJPY has run a long way since the 18 Marsh 2020 bottom but still haven't overtake any major swing high from its move down from higher altitudes. Will the expected overnight RBNZ hike bring the needed fuel to make it happen and complete this (d) wave in a larger triangle? If we get an ordinary or more hawkish hike, this baby may just run, run and run some more and probably come to test that swing high just below 84 and probably bypass it, but if we get a dovish one, well eventually we will probably still go higher but more in tune to the red arrow on the chart. I don't know where it comes from but have that feeling we will get a 0.50 hike but it may just be wishful thinking as well as I'm already invested. Hard to see them being dovish then looking forward though, despite chatter about Covid-19 uncertainties. They have about 200 cases daily, while in my country with about double population we have between 15-20k/day and our CB just hiked big, and Germany, although larger of course, 60k+ - so common Orr, you can do it!
We shall also keep tabs on the UST 10Y yield rate as it has a strong impact on JPY, i.e. higher rate, weaker JPY
We shall also keep tabs on the UST 10Y yield rate as it has a strong impact on JPY, i.e. higher rate, weaker JPY
Note
We didn't get quite the reaction to the rate hike, but make no mistake, this was not a dovish hike as 5 projected 0.25 hikes until end of 2022 is far from dovish. The selling of NZD as a response was simply for other reasons. In fact, the selling started well ahead of the announcement. So this was most likely a tactical selling by banks as we could see that treasury yield also dropped.So I think we still will see a much higher NZD going forward, but the short term structure of wave (d) changed slightly so it now looks more likely to be another 7 smaller swings (wxy) in the last wave up.
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