JPY is the nominal anchor for funding trades over the coming year as the BoJ commits to yield curve control targeting.
However, with NZD/JPY heading towards the years highs and looking increasingly expensive relative to rate differentials, questions on the strength of NZD may become a focal point for the RBNZ again
Strong NZ macro fundamentals suggest a policy response will be eventually be needed, but the RBNZ was somewhat cautious at its recent meetings as it continues to push back on expectations for an early rate hike.
Short NZD positioning has continued to be unwound and is close to neutral.
Technicals shows spot is approaching the 200wk SMA which could soon act as resistance as a bearish TD Setup sell signal calls for a dip
With NZD close to the year's highs, investors may prefer for a dip before adding