NZD/JPY Forecast Fundamental Analysis

15 juin 2023

New Zealand GDP disappoints with a slight decrease in the first quarter, while Japanese trade balance shows a larger deficit in May.

The New Zealand GDP for the first quarter contracted by 0.1% on a quarterly basis, with an annualized increase of 2.2%. Economists had predicted a similar drop but anticipated a higher rise of 2.6%. Comparatively, the third-quarter GDP in New Zealand had contracted by 0.7% on a quarterly basis but expanded by 2.3% annually. Additionally, the New Zealand GDP Annual Average for the first quarter rose by 2.9% quarterly, while GDP Expenditure saw a quarterly contraction of 0.2%. Economists had forecasted an increase of 2.5% and 2.1% respectively. In comparison, the fourth-quarter New Zealand GDP Annual Average had increased by 2.7% quarterly, while GDP Expenditure had declined by 0.9% quarterly.

Meanwhile, the Japanese Trade Balance for May reported a deficit of ¥1,372.5 billion, with the Adjusted Trade Balance at ¥0.78 trillion. Economists had predicted a reading of -¥1,331.9 billion and -¥1.12 trillion respectively. Comparing this to the Trade Balance in April, which showed a deficit of ¥432.3 billion, and the Adjusted Trade Balance at -¥1.04 trillion. Furthermore, exports for May rose by 0.6% on an annualized basis, while imports witnessed a significant decline of 9.9%. Economists had anticipated a contraction of 0.8% for exports and 10.3% for imports. In contrast, exports for April had increased by 2.6% annually, while imports had dropped by 2.3%.

Additionally, Japanese Machine Orders for April recorded a monthly increase of 5.5% and an annualized decrease of 5.9%. Economists had forecasted a rise of 3.0% and a larger decline of 8.0%. Comparing this to the data for March, which saw a monthly contraction of 3.9% and an annualized decrease of 3.5%.

Foreign buying of Japanese bonds for the period ending June 10th amounted to ¥14.7 billion, while foreigners' buying of Japanese stocks reached ¥1,324.9 billion. This can be compared to the data for the period ending June 3rd, which reported foreign buying of Japanese bonds at ¥521.3 billion and foreigners' buying of Japanese stocks at ¥608.7 billion.

Furthermore, the Japanese Tertiary Industry Index for April displayed a monthly increase of 1.2%, surpassing economists' expectations of a 0.5% rise. However, the index had dropped by 1.5% in March on a monthly basis.

Despite New Zealand entering a technical recession, the NZD/JPY forecast has turned cautiously bearish due to a double-top formation at a significant horizontal resistance level. Both bullish and bearish traders will compete for control, and the Relative Strength Index (RSI) remains in the overbought area. A short setup is being considered.